Nigeria’s Central Bank Guarantees Exporters Unfettered Access to Sales Proceeds
The Central Bank of Nigeria (CBN) has assured exporters that they will continue to have unfettered access to their export proceeds.
CBN Governor, Mr. Godwin Emefiele, during a presentation at Zenith Bank’s 2021 Export Seminar, which held via a virtual platform on Tuesday, however, urged them to reciprocate the good gestures of the central bank by repatriating their funds.
According to him, supporting greater trade within Africa and the global community is vital to the CBN’s objectives of enabling greater economic growth and creating employment opportunities for the country’s growing population.
He said the Covid-19 pandemic and its resulting implications on crude oil prices in 2020, which led to a significant decline in government revenues and forex earnings, had strengthened the case for the diversification of the economy.
Emefiele expressed optimism that the African Continental Free Trade Agreement (AFCFTA) offers opportunities for the Nigerian private sector to expand into new markets and seek new export opportunities, particularly in the area of manufacturing, ICT, agriculture and financial services.
He stated that the full implementation of AFCFTA would give Nigerian firms preferential access to markets in Africa worth $504.17 billion in goods and $162 billion in services.
He said: “I believe that we should seize this opportunity to ensure that Nigeria serve as a significant hub for international and domestic manufacturing companies seeking to serve the West, Central and East African markets.
“In addition, we have a very young energetic and technological savvy population that has been leveraging technological applications to improve service delivery in the areas of finance, logistics and agriculture to consumers in Nigeria.
“I believe the AFCFTA will provide an opportunity for these young talented Nigerians to expand their services across the African region. Developing trade portals that could support instant sales of goods manufactured in Nigeria to consumers in other parts of Africa is one aspect that can help to support the creation of jobs in Nigeria and improve foreign exchange inflows for the country.”
He said Nigerian banks were expanding across Africa, just as he encouraged financial institutions to also leverage their presence in other parts of Africa to support Nigerian businesses seeking to expand into new markets in Africa by providing trade facilities to those with strong potentials for growth.
He said: “At the CBN, we have taken considerable steps to improve the productive capacity of businesses, which would enable them to take advantage of export opportunities in Africa.
“Our intervention programmes in the agriculture and manufacturing sectors are helping to enable businesses to expand their scale of production, which is meeting growing domestic demand for goods, but also providing goods for the export market.
“In addition, we have set up a N500 billion non-oil export stimulation facility with the Nigerian Export-Import Bank (NEXIM). This initiative will also help to enable greater exports of processed agriculture commodities into other markets in Africa and in the global market.”
Emefiele, however, added that improving the business environment in Nigeria would be vital if the country was to harness the gains from AFCFTA.
According to him, the CBN, through its Trade Monitoring System portal (TRMS), has been helping to reduce the time it takes to complete the export documentation process, as the faster turnaround time could help to reduce delivery time for goods destined for exports and enable businesses to expand their output.
“Today, businesses can complete their NXP applications on the TRMS portal in 30 minutes relative to two years ago, where it could take as much as two weeks to complete the process.
“We are also working with stakeholders in repositioning the Nigerian Commodity Exchange, which would help to support greater trade for operators in these vital sectors earlier mentioned.
“Once the exchange becomes fully operational in the second half of the year, international buyers of raw and processed agricultural commodities will be able to enter into forward contracts with domestic suppliers on the exchange, and they can be assured of not only the quality of the goods sold through the exchange, but on the expected date of delivery.
“We believe these forward contracts will help to support improved productivity for farmers and agro-processors, it will also help to improve access to credit for these entities using the forward contracts as collateral,” he added.
According to him, supporting greater trade within Africa will also require the presence of a viable payment settlement system. He added that the CBN is working with key stakeholders in Africa, particularly AfreximBank, to improve the underlying payment infrastructure to support greater intra-regional trade, through the Pan African Payments and Settlement System (PAPSS).
He said: “This initiative will enable payments in our local currency for goods in other African countries and vice versa, without the need for a third-party currency. This initiative will help to reduce the cost of cross-border trade, improve convertibility of the naira and increase trade opportunities for Nigerian businesses in Africa.
“Although Nigeria stands to gain from expanded trade, I believe it is also important that we pay attention to the cost that expanded trade through the AFCFTA could have on local businesses and communities.
“Smuggling of goods produced in non-African countries into Nigeria, and abuse of rules of origin have often resulted in significant job losses and displacements of workers in key sectors of our economy such as agriculture and manufacturing. It is vital that we work with the governing body of the AFCFTA in addressing these concerns, as it has profound implications on unemployment and security in Nigeria.”
In his remarks, the Group Managing Director of Zenith Bank, Mr. Ebenezer Onyeagwu, urged Nigerians to take advantage of the federal government’s economic diversification initiatives, with particular reference to non-oil exports.
Onyeagwu said the CBN’s emphasis on exports improved the value of non-oil exports from four per cent in 2017, to 13.21 per cent in 2019, before it declined to 11.45 per cent in 2020, due to the COVID-19 disruption.
He said Zenith Bank was supporting the drive in so many ways by identifying emerging opportunities in stimulating non-oil exports.
“We were able to identity 100 SMEs that we are incubating. None of them has done any export when they commenced with us.
“But we are happy to announce that 100 of these SMEs we incubated since last year are today doing exports and generating export proceeds no matter how little.
“The discounted cash reserve requirement lending facility; Zenith Bank has accessed N200 billion from this window and disbursed about N33 billion to support export customers. The bank has the will to continue to avail this opportunity to exporters who are ready to make use of it to grow and increase the volume of their export business with single-digit long term finance,” he stated.
Also speaking at the forum, the Director-General of the AfCFTA Secretariat, Mr. Wamkele Mene, said reliance on the export of commodity products had become a scourge on Africa’s prosperity, adding that the transformation of the African economy should be driven by the non-oil sector.
Mene said agriculture would play an important role in Nigeria’s quest for economic diversification as it did in the past when it contributed 75 per cent of the country’s foreign exchange, with appropriate policies put in place.
He said: “By focusing on providing infrastructure like energy and transport for agriculture, Nigeria will chart its way from the boom and burst circles of oil economy… even though the zero oil initiative targeted at boosting non-oil exports is yet to make the desired impact.”
The President of the African Export-Import Bank, Professor Benedict Okey Oramah, urged Nigeria to exploit the wider African market, adding that Nigeria could become the manufacturing hub of Africa if appropriate policies and incentives are introduced while sustaining the CBN’s emphasise on the growth of non-oil exports.
Oramah said Nigeria could become a hub for labour-intensive manufacturing in Africa and could take the space China’s migration to less labour intensive manufacturing would create in Africa.
“China is gradually moving away, opening opportunities for African countries to replace. If China exits and nobody steps in to fill the void another non-African entity will take the $65 billion trade. Only fools will sit on their palms and let such an opportunity pass by,” Oramah said.
The Director-General of the Nigeria Export Promotion Council (NEPC), Mr. Segun Awolowo, who was represented by the Director of Policy and Strategy of NEPC, Dr. Ezra Yakusak, described AfCFTA as an opportunity for Nigeria’s SMEs to grow and become major actors in Africa’s export market.
Meanwhile, the apex bank also on Tuesday directed banks and Bureau De Change operators to henceforth desist from rejecting lower and old dollar denominations.
It also advised banks and other authorised forex dealers to stop defacing or stamping US dollars.
The central bank gave the directives in a circular dated April 9, 2021, which was signed by its Director, Currency Operations Department, a copy of which was posted on its website.
It explained that in recent times, the banking sector regular had been inundated with complaints from members of the public on the rejection of lower/old denominations of US dollar bills by banks and other authorised dealers.
Owing to this, the CBN stated that, “all deposit money banks and authorised dealers should henceforth accept both old series and lower denominations of the US dollars that are legal tender for deposit from their customers.”
It further stated that it would not hesitate to sanction any bank or other authorised forex dealers who refuse to accept old or lower dollar denominations of US dollar bills from their customers.
“In addition, all authorised forex dealers are advised to desist from defacing/stamping US dollar banknotes as such notes always fail authentication test during processing and sorting.”
The central bank recently took some measures to encourage forex inflows through Diaspora remittances into the country.
Part of the policies included the granting of unfettered access to forex from Diaspora and other money transfer remittances as well as the introduction of the “CBN Naira 4 Dollar Scheme,” an initiative aimed at incentivising senders and recipients of international money transfers.
The CBN had explained that the new policies were expected to attract diaspora remittances through the official foreign exchange channels as well as support forex stability in Nigeria.