Tuesday, September 12, 2017

How CBN Can Grow Non-oil Export Volume Via Healthy Competition Among Banks

The fact that the solutions to our foreign exchange volatility resides in the growth of non-oil export volume in Nigeria is no more a news and neither does it have to be a symposium discussion. This is because the reasons are very obvious before our eyes. Our major foreign exchange earner now is the crude oil export, but we also have great potentials to earn even much more export proceeds from Agricultural and Solid Mineral sectors of the Economy.

It is interesting to note that while the total non-oil export volume from Nigeria in 2016 was less than $2 million, the total value of crude oil sold by Nigeria between January and December 2016 dropped by $6.7 billion from $40.5 billion in 2015 to $33.8 billion; a comparative analysis of official crude oil lifting values published by the Nigerian National Petroleum Corporation (NNPC). In my opinion, the reason why the non-oil export volume has been at the low level is simply because there are no supporting drivers in the economy. I discovered the drivers gap could really help us increase awareness and encourage a lot of businesses to go into non-oil export business in recent times, when we had shortage of foreign exchange due to the drop in the price and sales of our crude oil. Guess who these drivers are, the Commercial Banks!

As the price and sales of oil began to decline and the foreign exchange availability became a mirage, the commercial banks, in the bid to survive and stay afloat, despite the economic recession became suddenly very creative in the drive to generate foreign exchange. They started by training their staff in different areas of export, they set up export desk to take enquiries on exportation, they began to work on export Finance product programmes, they organised Export sensitisation workshop across the country and put together so many more plans and strategies to grow their export customer base. Little did we know that all these were gear towards generate foreign exchange in order to fund their Import transaction, thereby growing their income for business survival and not because they really want to contribute to the growth of the non-oil export sector of the economy.

This position of mine has been vindicated now that the foreign exchange has started flowing in a fairly reasonable manner from the CBN. You know what has happened now, most of the commercial banks has reverted back to their default mode of allowing export to be on auto pilot without a driver and concentrating on what brings in the cash- Importation business. Where are the export training for staff? Where are the export sensitisation seminars? Where are the export vibrant desks? Where are the product papers for export financing? Where are all the great and very creative export growth initiatives? They have all gone into oblivion in most of the banks. How I wish the drive and passion of the Nigerian banks for exportation had continued, we would have been far ahead now and even very close to the desired breakthrough in this sector.

In order to bring the banks back to continue their drives towards export growth, here are my suggestions. I think the CBN should come up with a foreign exchange allocation mechanism, which allows any bank to get a percentage foreign exchange allocation (that CBN wants to sell per time) that is equivalent to the percentage of the export proceeds received in that banks, based on the exportation done by its customers. For example, if bank A received an export proceeds that amount to 10% of the industry total in the month of January, such a bank should receive only 10% of the foreign exchange allocation to be sold by CBN in the month of February.

I expect some bankers to kick against this now because some banks seem to have larger share of the export proceeds inflow because they have more exporters, to solve this the CBN can give a notice of 3months to all the banks ahead of commencement of this policy. This is to enable the banks who currently have low export proceeds to put together their strategies, grow the capacity of their staff and begin the execution of their plans to increase their export customers base.

I know that some bankers reading this now might be saying that the Exporters do not declare the details of their export businesses by avoiding the filling of NXP in their pre-export documentation and some might even say that CBN is the one discouraging them by sanctioning them for the offence of non-repatriations of export proceeds committed by the exporters. These are valid concerns and here are my responses to these issues. First, I will like to say that the two major initiatives of CBN which include the Investor Exporters window (that enables exporters to sell their export proceeds at a better rate) and the directive that now ensures that all Bill of lading carry the NXP number (so as to ensure that no exporter is able to ship goods out of the country through the seaport without the requisite pre-export documentation) have both solve the problems and remove the fear of the Nigerian banks regarding exporters who avoid documentations done through them. On the other issue of non-repatriation of export proceeds, I will like to recommend that CBN rescind the regulation that says that the commercial bank will be sanctioned for non-repatriation of export proceeds (at least for all, the previous exportation done through them) since, the two new regulations should be able to reasonably cub these practices. The CBN should simply inform the commercial banks to decline any request for further exportation from any company that is into such practices. The BVN number of the signatories to such a company's account can be used to by the bank to trace such customers.

Finally, it will also be of immense importance to state that the CBN should take the front row in this drive by making good her promise to grow the sector through the approval and release of the Export Stimulation Funds requests that are currently pending before the Governor of the Apex Bank.

If indeed we really desire to grow the non-oil export sector in this country, we should not allow it to be on autopilot again, we need to engage drivers who will be committed to championing the course because of what is it for them.

Bamidele Ayemibo

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