Towards Achieving RT200

Nume Ekeghe writes on the steps taken by the Central Bank of Nigeria to realise the projected $200 billion non-oil inflow through the RT200 initiative

In February this year, the Central Bank of Nigeria (CBN) announced plans to achieve $200 billion non-oil export foreign exchange inflow as part of efforts to shore up the country’s foreign reserves and reduce the shock of external pressures occasioned by the fluctuating price of oil on the economy.

The Nigerian economy has been challenged on many fronts in recent years due to a combination of local and global factors. Disruptions due to the COVID-19 pandemic, delays in global logistic value chains and local security challenges have exerted undue pressure on the Nigerian economy, making macroeconomic management very difficult. 

These factors impacted oil production and prices, disrupted trade and exports, reduced capital inflows, and impacted food production. They also exposed the fragility of the Nigerian economy and the need for a more diversified economy.

While crude oil is a major dollar earner for the country, history has shown that it is unpredictable and unreliable, opening up the economy to external shocks; hence the drive of the government to diversify the economy and depend less on oil earnings.

As demand for dollar continue to rise amidst a dwindling inflow, the CBN had taken several steps to manage the dollar shortage in the country. However, as the helmsman of the apex bank, Mr Godwin Emefiele noted, “Monetary Policy alone cannot bear all the burden of the expected adjustments needed to manage these difficulties. These problems call for urgent design and steadfast implementation of other supportive, structural, and complementary policies that are broad based, coordinated and focused on complementing the work of the monetary authority.”

Setting a $200bn Target

Thus, at the end of the February 2022 Bankers Committee meeting, the CBN Governor, Godwin Emefiele had announced the commencement of the RT200 FX programme which is a drive to meet up with the target of $200 billion through exports within a time frame of three to five years.

According to the CBN governor, the programme was borne out of the realization that most of the nation’s current sources of foreign exchange inflows were unreliable, and perennially prone to exogenous vicissitudes of global economic developments. 

“We have all been witnesses to the ever-changing fortunes of oil-exporting countries. Even those that have been reputed to manage their oil proceeds well also suffer from major shocks once oil prices plummet. In order to avoid these sudden adjustments to our economic life, we needed to focus on strategies that can help us earn more stable and sustainable inflows of foreign exchange. We would need to follow the best practices of other countries and ensure that we protect ourselves a little bit from factors that are beyond our immediate control, “Emefiele stated.

Building RT200 Pillars

The RT200 initiative is hinged on five pillars namely 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.

The Value-Adding Export Facility is expected to provide concessionary and long-term funding for businesspeople who are interested in expanding existing plants or building brand new ones for the sole purpose of adding significant value to our non-oil commodities before exporting same.

There is also the Non-Oil Commodities Expansion Facility, which will also be a concessionary facility designed to significantly boost local production of exportable commodities. This facility will be designed to ensure that expanded and new factories that are financed by the Value-Adding Facility are not starved of inputs of raw commodities in their production cycle.

Also announced was the Non-Oil Export proceeds repatriation Rebate Scheme, a special local currency rebate scheme for non-oil exporters of semi-finished and finished produce who show verifiable evidence of exports proceeds repatriation sold directly into the I&E window to boost liquidity in the market. 

The rebate scheme, according to the CBN, is designed to incentivize exporters in the Non-Oil export sector to encourage repatriation and sale of export proceeds into the forex Market and had attracted an inflow of $60 million in two months from 150 exporters who jointly earned a rebate of N3.5 billion. 

Under the rebate scheme, exporters who are eligible would get a rebate of N65 for every $1 repatriated and sold at the I&E Window for other thirty party use, and N35 for every $1 repatriated and sold into 1&E for own use on eligible transactions only.

Identifying Exporters’ Challenges 

However exporting products from Nigeria is still riddled with many challenges. This was the focus of the maiden edition of the Biannual Non-Oil Export Summit held in Lagos recently. Stakeholders in the export value chain had gathered to discuss and seek out a way out of the various dilemmas exporters in the country are facing. 

Emefilele whilst speaking at the summit had said, “We have heard of people who want to export their goods queuing for weeks or months before their goods can go out. So because time is against us, in the short run, let us work on what the NPA (Nigerian Ports Authority) and customs do for the exporters. Whether they want to create a set of dedicated route from which they can easily export their goods.

“It is sad that because of the problem of finding an easier route for goods to be exported out of the country, Nigerian exporters prefer to transport by road or sometimes barges from Lagos to Accra or republic of Benin to export from there. Doing these, we lose the opportunity to earn export proceeds.”

On his part, the Managing Director of the NPA, Mohammed Bello-Koko noted that part of the challenges of speeding up the process of exporting is automation of the process.

“The problem with the automation is that each of the stakeholders is working in silos. So the level of automation of the NPA is not the same with the customs and the shipping line. The second problem is that when we all automate will we be able to integrate the system.” The NPA boss noted.

Taking the Steps Forward

To address this, the CBN governor alongside the Group Managing Director of Access Corporation, Herbert Wigwe, who is also the Chairman of the Committee of Bank CEOs supported by bank chiefs and other stakeholders in the export ecosystem had made major decisions.

One of such was the agreement that the bankers committee will work with the export ecosystem to help integrate the automation system in the export value chain to cut short the time that goods spend at the ports while heading to their destination and make the process less cumbersome.

Aside this, the Governor of the CBN, who stated that the country has reached a stage where non -oil exports proceeds is “badly needed” said “I want to appeal to the Nigerian Ports Authority and the Nigerian Customs that we establish a working group comprising the bankers committee, NPA, the Nigerian Customs and maybe a shipping line to resolve these issues. 

“In the short run let us look at how do we immediately create a dedicated export route for exporters, so that their goods can leave. Many of those containers that bring goods into the country go out empty because of these problems. Let us work on finding a dedicated route where exports can go out easily. 

“In the long run we can talk about how do we work on the Lagos free trade zone and create a road that will take the goods though an express road. The Lekki port has a blueprint of a road that goes to Ondo, which is about 50km. 

“The Infracorp is ready to fund that if those of us can yield in. Because what I find is that instead of yielding to doing what is for the good of our country, people want to own colonies because they believe it is their exclusive responsibility. We are talking about how we can work together now. In the long term we can talk about Badagry, Bonny and Ondo ports.”

Meanwhile, the Lagos state Governor, Babajide Sanwoolu said by the end of this year, there will most likely be a reduction in the number of containers heading to the Apapa port, as the Lekki ports will be open for use by the end of this year.

He said: “I’m happy to inform us that before the end of the year, Lagos should be handing over the Lekki ports for the use of all Nigerians. The Lekki ports would be the biggest and deepest seaport in the whole of West Africa if not in Africa. And that will give an opportunity and choices to export producers and people in that space. And can also confirm that even the Badagry ports, we are waiting to get Federal Executive Council (FEC) approval so that the eastern part of Lagos in another couple of years should have a Badagry port. All this is to reduce the pressure in Apapa and Tincan ports in Lagos.”

Determination to Achieve $200bn goal

While the goal of $200 billion non-export earnings may seem unattainable to some at the moment, the CBN governor is quite optimistic of meeting target over the next three to five years saying “I am resolute and determined that we can achieve it. 

“Many countries that are much less endowed than Nigeria are doing it. Consider for example that agriculture exports alone from the Netherlands was about $120 billion last year. Yet, Netherlands has a land mass of about 42,000 square kilometers, which is much smaller that the land mass of Niger State alone, which sits on over 76,000 square kilometers.”

He expressed confidence that the decisions reached at the end of the summit would be invaluable in helping Nigeria reach our ultimate goal of achieving $200 billion in non-oil exports over the medium term.