MON 14 FEB, 2022-theGBJournal- The Centre for the Promotion of Private Enterprise (CPPE), an ECONOMIC AND BUSINESS ADVOCACY THINK TANK said Bankers Committee and the Central Bank of Nigeria (CBN) should follow a set of rules which it considers critical success factors for the RT 200 initiative, new CBN policy which seeks to attract 200 billion dollars inflow exclusively from non oil exports over the next three to five years, before implementation of the policy because of the likely systemic shocks, business disruptions, macroeconomic dislocations and weakening of investors’ confidence.
The CPPE said, structural issues are very vital for driving the growth and competitiveness of non-oil exports. Structural variables are not within the purview of the CBN or the Bankers Committee. The fiscal authorities have much bigger roles to play in fixing the structural constraints which have been impeding non-oil exports productivity and competitiveness for decades.
‘’Therefore, collaboration with fiscal authorities is a critical success factor for the realization of the RT 200 outcomes. It is impossible to clap with one hand. Complementarity between the fiscal and monetary authorities is therefore imperative for the success of this scheme,’’CPPE said in a commentary note to theGBJournal Sunday.
According to the Centre, the current pricing regime in the Importers and Exporters [I & E] window of the foreign exchange market is at variance with the objectives of the RT 200. It will be a major impediment to the achievement of the Race To $200 billion Export Proceeds Vision. Exporters are currently not encouraged to remit export proceeds at the current official rate of N416/$. It is a pricing regime that inherently penalizes exporters and it is a major demotivating factor to investment in the non oil export sector. Therefore, the CBN should take urgent steps to ensure that the exchange rate regime in the I&E window is market reflective.
‘’The pricing regime should be flexible and reflect the demand and supply dynamics. This is the biggest incentive that the apex bank can give to the non-oil Export sector. It will be more impactful than any rebate that the CBN could be contemplating,’’ it said.
Exporters in the economy must be allowed unfettered access to their exports proceeds. The current policy regime on export proceeds is stifling, restrictive and repressive. It is inhibiting export initiatives, enterprise and growth. Regulations around export proceeds should be immediately relaxed in the spirit of the RT 200. Exporters must be able to sell their proceeds at a mutually agreed exchange rate to either the banks, importers or the BDCs as the case may be. The apex bank should institute a willing buyer-willing seller framework for export proceeds.
CBN should expand the scope of its new the foreign exchange supply strategies and incentives to cover other sources of foreign exchange inflows into the economy. These sources include: Foreign Direct Investments [FDI], Foreign Portfolio Investments [FPI], Diaspora Remittances, Diplomatic Missions in the country, Development Partners, Multilateral Agencies, Oil companies, International Aid agencies and Donor Agencies. Inflows from these sources should be completely liberalised through a market driven I&E window. Current regulatory regime for inflows is obstructive and inhibiting.
Foreign exchange generating MDAs should be encouraged to sell their Forex at the I&E window at a market reflective exchange rate. Some of these agencies include the Nigeria Ports Authority [NPA] and the Nigeria Maritime Administration and Safety Agency [NIMASA].
Meanwhile, the Governor of the CBN hinted of the imminent cessation of the sales of foreign exchange to the banks.
‘’The implication of this is that the CBN will stop its supply of forex to the foreign exchange market,’’ CPPE said.
The CPPE noted and commended the five key anchors of the new policy which is as follows:
-Value Adding Export Facility
-Non Oil Commodity Expansion Facility
-Non Oil Export Rebate Scheme
-Non Oil Export Terminal Financing
-Bi-annual Non Oil Export Summit
The Centre also noted the new focus of the CBN on supply side strategy.
Over the last couple of years, the CBN has been fixated on managing the demand side of the foreign exchange market and the outcomes have been suboptimal.
‘’The reality is that supply side policies are even more critical and impactful than demand management interventions in the foreign exchange market.’’
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