Thursday, February 17, 2022

How CBN Can Successfully Implement The RT200 FX Programme

The Central Bank of Nigeria (CBN) has announced the commencement of a very laudable initiative called “Race To $200 billion in Forex Repatriation” (RT200 FX Programme). This is aimed at supporting the businesses in non-oil export sector in order to grow the non-oil export volume to the point of having an annual repatriation of about $200 billion in the next 3-5years. The CBN Governor stated in his speech that the RT200 Programme will have five key anchors to drive the implementation and these will include: Value-Adding Exports Facility, Non-Oil Commodities Expansion Facility, Non-Oil FX Rebate Scheme, Dedicated Non-Oil Export Terminal and Biannual Non-Oil Export Summit. 

This is a long awaited initiative because the non-oil export sector has been neglected for such a long time because of the cheap and easy money that the country is making from the oil and gas sector. However, in order to ensure that this initiative achieved the target goal of annual repatriation of about $200 billion in the next 3-5years, I will be making five recommendations which can be considered by the implementation committee of the RT200 FX Programme at the CBN.  


Processing Plants 

The first recommendation has to do with the implementation of the first anchor of the RT200 FX Programme which Value-Adding Exports Facility. This involves providing concessionary and long term funding to businesses people for the setting up of processing plants to add value to the primary commodities from the agricultural sector. This is to ensure that the Nigerian export move away from commodities to finished goods and this will consequently increase the export earnings from this sector. The way this has been done by state government in the past is to raise funds and partner with a private sector to set up the processing plant in a public private partnership arrangement. This means that the plant will only create a few jobs, increase inequality and keep the wealth generated from the business among very few billionaires in the country.

To avoid a repeat of the old model without inclusive growth, it will be great if the  CBN can consider a public private partnership arrangement that setup a shared agro processing facilities in different states of the country based on the predominant commodity that is cultivated in the state. This facility will process and package different products for SMEs in and the packaging will be customized for each SME. This means all the SMEs need to do is to deliver their raw materials like plantation, cocoa beans, ginger etc (depending on what the factory is meant to process) in one to two weeks the commodities would have been processed to finished product, packaged in the name of the SMEs and the SMEs will only pay a service charge per unit of the processed and packaged products. 


This model will make many SMEs in different states to now focus on the work of developing export markets for these products in different parts of the world. Also this model will make the SMEs to worry less about power, quality, packaging, certification etc because the processing plant would have taken care of all of these. This model will create market for farm produce, increase efficiency of value chain operators, increase processing capacity, increase job creation, poverty eradication, reduce inequality and decrease insecurity in the country.


Primary Products 

The second recommendation has to do with the implementation of the second anchor of the RT200 FX Programme which is Non-Oil Commodities Expansion Facility. This involves the provision of concessionary facilities to fund the primary production of commodities. It is designed to significantly boost local production of exportable commodities and this in turn ensures that the new agricultural processing facilities in the first anchor have enough raw materials to be used to produce finished products.  


To be able to get the maximum benefit for the country through this second anchor, it will be great if the CBN can consider other commodities with huge potential for foreign exchange generation besides the regular ones which cocoa beans, cashew, sesame seeds and ginger. If the goal of CBN is to generate more foreign exchange for the country, then focusing on the production of cocoa beans, cashew, sesame seeds and ginger would not lead the nation to that desired destination because, as at 2019, the export market sizes for these commodities are cocoa beans ($9.35 billion), cashew ($6.84 billion), sesame seeds ($2.2 billion) and ginger ($0.85 billion).  


To generate the much needed foreign exchange from the processing and export of agricultural commodities, then, the CBN should consider the expansion of the production of soya beans, wheat, palm oil, coffee, corn. This is because the export market size of each of these product is more than the combined export market size of cocoa beans, cashew, sesame seeds and ginger. As a matter of fact, the export market sizes of these commodities at the primary level are soya beans ($58.1 billion), wheat ($42.6billion), palm oil ($33.2billion), coffee ($30.4 billion) and corn ($30.2billion). This means the export market sizes and consequently export earnings of these commodities after value addition will be far higher than the usual commodities. It is also important to state that the support of CBN for these commodities should cover the use of improved seedlings and other support that would lead to increase yield per hectare and consequently reduce the production price. 


Payment of Rebates 

The third recommendation has to do with the implementation of the third anchor of the RT200 FX Programme which is Non-Oil FX Rebate Scheme. This involves a special local currency rebate scheme for non-oil exporters of semi-finished and finished produce who show verifiable evidence of exports proceed repatriation sold directly into the I & E window to boost liquidity in the market. It may interest the CBN to know that the current high inflation in the country coupled with the infrastructural deficit is making the export business to become less and less profitable. Therefore making exporters to sell the repatriated export proceeds on the I & E window would constitute a discouragement to exporters and thereby becoming a clog in the wheel of progress of the race towards the realisation of the RT200 FX target.


One would have expected that exporters be allowed to sell their export proceeds in their preferred market and to the highest bidder which was the practice that came into being when Professor Chukwuma Soludo was the CBN governor. This is because, this will increase the supply in the foreign exchange market and thereby leading to reduction in price and thereby leading to convergence of the exchange rate (which is a natural law of demand and supply). However the current CBN administration does not sees this as a viable option. 


In order to be able to encourage the exporters and garner their supports around the RT200 FX programme, the rebate of the CBN should cover a significant gap in the difference between the current rate on I & E window and the parallel market. This is what the export expansion grant would have done for exporters but it is not well funded by the federal government and this has made the Nigerian exporters to be unable to offer competitive pricing in the export market. A rebate that covers at least 50% of the difference in rate of exchange in these two market will go a long way to to drive more entrepreneurs into the non-export business 


Port Terminal 

The fourth recommendation has to do with the implementation of the fourth anchor of the RT200 FX Programme which is Dedicated Non-Oil Export Terminal. This involves the establishment of a Dedicated Non-Oil Export Terminal to solve the perennial problems of port congestion cited by exporters as a major impediment to improved operations. I will like to stress that the problem of exporter at the port is more than port congestion. The fact that there are different agencies of government to work with is a big challenge because they are all scattered in different parts of the city. 


Therefore, the proposed dedicated non-oil export terminal should be such that it becomes a one stop shop for exporters. This therefore means that, this terminal should have an office for all the government agencies that are involve in the export process irrespective of the item of export. That means the terminal should have offices for government agencies like the Nigerian Custom Service, NAFDAC, Pre-shipment Inspection Agents, Nigeria Agricultural Quarantine Service, Federal Produce Inspection Service, Standard Organisation of Nigeria, commercial inspection agents like SGS and Bureau Veritas and the Nigerian Export Promotion Service etc.


In addition to this, the terminal should have storage facility that can accommodate both perishable and non-perishable products. It should be built at a location that is close to water channel to facilitate the transfer goods to the port via the barge system or located close to a railway station to facilitate the transfer goods to the port via rail. This terminal should not operate for just 8hours a day but rather for 24hours. This is to ensure that goods are cleared for export at any time of the day when goods arrive at the terminal.  


Periodic Programme

The fifth recommendation has to do with the implementation of the fifth anchor of the RT200 FX Programme which is Biannual Non-Oil Export Summit. This involves a biannual programme that brings together all the relevant stakeholders in the export business including bankers, customs officials, the Nigerian Ports Authority, the Nigerian Export Promotion Council, clearing agents, cargo airlines, shipping lines, logistics companies, insurance practitioners. This is a very necessary event because it enables the stakeholders to deliberate on the export business challenges and fashion out the way forward. 


However, it may interest the CBN to know that there is a programme like this on ground already. It is an initiative of the Network of Practicing Non-Oil Exporters of Nigeria(NPNEN). This is a not-for-profit organization registered under the laws of the Federal Republic of Nigeria in Part C of the Companies and Allied Matters Act (CAMA), as an Incorporated Trustee. It is an umbrella platform for collaboration among the different actors in Nigeria’s non-oil export value-chain. NPNEN organize an annual event called Non-Oil Export Conference, Exhibition and Awards (NECEA) and this event brings together critical stakeholders in the non-oil sector including top officials of government, civil society, private sector, bankers, customs officials, the Nigerian Ports Authority, the Nigerian Export Promotion Council, clearing agents, cargo airlines, shipping lines, logistics companies, insurance practitioners the media and academia to dialogue on how to refocus the country’s non-oil sector, for a more effective participation in global trade. 


Rather than duplicating efforts, it will be great if the CBN can partner with NPNEN-NECEA to jointly organize this event in collaboration with the Nigerian Export Promotion Council (NEPC). This means that NPNEN-NECEA can now hold as a Biannual Non-Oil Export Summit to create the single largest platform for all stakeholders in the non-oil export sector to form a synergy and speak with one voice on how to move the sector forward. This programme will therefore create an avenue for periodic review of the progress being made in the implementation of the RT200 FX Programme 


Finally, it is important to state again that this is a very laudable initiative and there is need for capacity building for the staff of the CBN and the committee that will be implementing this programme. This will make them to have a comprehensive view of the export business sector and become well equipped to put in place effective strategies for the implementation of the five anchor programmes. The Race To $200 billion in Forex Repatriation is a very audacious goal but it is possible, if personal interests are put aside for the greater good of all and sundry in Nigeria 


For the love of Nigeria, Africa and Mankind

Bamidele Ayemibo (

Lead Consultant, 3T Impex Trade Academy