The Central Bank of Nigeria (CBN) says that its introduction of the “Race to $200 billion in FX Repatriation” (RT200 FX) initiative has spurred significant improvement in the country’s export remittances.
Anne Nnenna Ezekhennagha, Principal Manager, Trade and Exchange Department, CBN, disclosed this at the just concluded annual conference of the Finance Correspondents Association of Nigeria (FICAN) with the theme “Boosting Domestic Capacity for Sustainable Export Earnings.”
However, the apex bank representative at the event held in Lagos did not disclose any figures showing the “significant improvement” in the export remittances
Checks however showed that in the first quarter of this year, Nigeria’s diaspora remittances rose by 20.3 per cent year-on-year to $5.16billion, up from $4.29billion in the corresponding period last year.
On a Quarter-on-Quarter basis, remittances rose by 2.6 per cent in Q1’22 from $5.03 billion in Q4’21
As of the half year 2022 (H1, 2022), the apex bank said it had recorded $2.4 billion in diasporan remittances, slightly lower than a total of $2.9billion received throughout the last year of 2021.
However, this newspaper could not link the rise in remittances to CBN’s RT200 FX policy because the apex bank’s data show that remittances from Nigerians working abroad had been on an upward swing since the third quarter of 2020, five clear months before the introduction of the policy.
The CBN introduced the RT200 policy in February this year to reduce the country’s exposure to volatile sources of foreign exchange and improved sustainable forex inflow by giving rebates to exporters who repatriate their proceeds within a specific period of time
The policy seeks to raise $200 billion in the next five years in forex earnings from non-oil sources by giving a N35 bonus for every dollar repatriated through the Investors ‘and Exporters’ Forex window.
Ezekhennagha said the CBN had paid rebates to exporters who have taken the opportunity of the RT200 scheme in the first two quarters of the year and will commence another series of examinations and verification exercises so that the third quarter rebates would be paid.
“We have seen significant improvement, not just in the figures that have been repatriated, but also in the number of exporters that are now willing to come to the formal sector.
“A lot of our exports have been happening informally, but with this scheme, we have found that a lot more players in the export sector are willing to come to the formal sector.” she asserted.
She added that there has also been a significant increase in the number of commodities that are exported from Nigeria.
According to her, “The solid minerals, we are seeing more and more players in that sector coming into the formal sector to report their exports and participate in the RT200 FX scheme. So, I would say it has been very successful so far.”
Nigeria has faced grave shortages in foreign exchange (forex) in recent times so much that foreign airlines operating in the country could not repatriate operational proceeds until the apex bank intervened by remitting $265million, out of about $465million demanded by the airline firms.
The intervention followed after the airlines threatened to shut down their Nigeria operations if they could not access forex.
Although there are a number of CBN policies and programs aimed at encouraging inflows, Nigeria’s inability to attract foreign currencies through improved export value, diaspora remittances and investments have resulted in a severe FX shortage in the country, encouraging arbitrage in the parallel market.
The acute shortage of forex in the official window, and its attendant volatility of the exchange rate which has seen the local currency depreciate to over N700 per dollar in the black market, has created considerable uncertainty and unpredictability for investors in the economy.
According to the immediate past Director General of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, the unprecedented currency depreciation has given rise to the high cost of production due to the high import dependence of the manufacturing sector on imported raw materials.
This, he said, has led to high operating costs across businesses in practically all sectors of the economy, and low sales and turnover because of the increase in price and effect on demand.