Manufacturers applaud CBN and seek full parallel market FX rate coverage

Ibekimi Oriamaja Reports.

The man has praised the Central Bank of Nigeria’s (CBN) ‘Race to $200 billion in FX (foreign exchange) Repatriation (RT200FX)’ program.

The group, however, believes that the program’s rebate should be expanded to cover the difference in FX rates between the official and parallel markets.

Mr. Segun Ajayi-Kadir, Director General of MAN, stated this while speaking with Track News about the program’s current status, which shows that the CBN paid N23.6 billion in forex rebates to non-oil exporters in the first half of 2022 (H1’22).

“Without a doubt, the CBN RT200 FX programme is a good initiative because it was designed to boost non-oil export growth in Nigeria,” Ajayi-Kadir said. This comes against the backdrop of the slow implementation of the Export Expansion Grant.

“However, we should also consider the RT200FX’s suitability as an export incentive.” Over the next 3-5 years, the goal is to earn $200 billion in foreign exchange from non-oil proceeds. It is critical to create a conducive and stimulating environment for scaling in order to achieve the goal.

“However, it should be noted that the CBN’s N65 to $1 or N35 to $1 rebate does not cover the difference in FX rates between the official and parallel markets.”

“The N23.6 billion rebate payment in H1 2022 assumed a commendable level of repatriated export proceeds sold through the I&E window.”

“On this score, we can also assume that the program is encouraging FX inflows and sales.” However, the nature of the export that earned the repatriated proceeds should pique our interest. Are they products with added value? Are they made or processed goods?

“This will allow us to answer the critical question of whether we have increased job and wealth creation within the export value chain.”

“While applauding the CBN for the initiative, one could suggest that the rebate be increased to around N100-N150 to have a direct and effective impact on the beneficiary’s business.” This will encourage more investment in export-oriented manufacturing and, in some ways, alleviate the high cost of forex.”