Says banks must begin to source their forex from export proceeds.



The Central Bank of Nigeria (CBN) has indicated that it would discontinue the sale of foreign exchange to Deposit Money Banks (DMB) by the end of the year.

This is as the apex bank has said that the banks must begin to source their forex from export proceeds, hence the need to support the non-oil sector of the economy.

This was made known by the CBN Governor, Godwin Emefiele, while speaking at the special press briefing at the end of 364th Bankers Committee meeting on the launch of the bank’s new forex repatriation scheme ‘RT200 FX Programme’ on Thursday February 10, 2022, at its headquarters in Abuja.


The RT200 FX Programme which stands for the “Race to US$200 billion in FX Repatriation”, is a set of policies, plans and programmes for non-oil exports that will enable Nigeria attain a lofty yet attainable goal of US$200 billion in FX repatriation, exclusively from non-oil exports, over the next 3-5 years. 

Emefiele pointed out that the decision was in line with the apex bank’s new commitment to boost the country’s foreign reserves through proceeds from non-oil exports.


What the CBN Governor is saying about FX supply to banks
[b]Emefiele said, “The era is coming to an end when, because your customers need 100million dollars in foreign exchange or 200 million dollars, you now want to pack all the dollars and pass it to CBN to give you dollars.

“It is coming to an end before or by the end of this year. We will tell them don’t come to the Central Bank for foreign exchange again go and generate your export proceeds.

“When those export proceeds come, we will fund them at 5% for you and they will earn rebait. Then you can sell those proceeds to your customers that want 100 million dollars. But to say you will continue to come to the Central Bank to give you dollars, we will stop it.


“Nigeria cannot continue to depend on FX earnings to fund its import obligations from revenue coming from earnings from products where we cannot determine both price and quantity.’’

Under the RT200 FX programme, which is to take immediate effect, the CBN will provide concessionary and long-term loans for business people who are interested in expanding existing plants, or building new ones for the sole purpose of adding significant value to the non-oil commodities before exporting same.

These loans will have a tenure of 10 years, with a two-year moratorium and an interest rate of 5%.

The CBN boss during the briefing said that the newly introduced programme will have 5 key anchors which includes; 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.
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What you should know
The CBN intends that the new RT200 FX Programme will be similar to the Naira4Dollar scheme for diaspora remittances,  which offers recipients of diaspora remittances through CBN’s International Money Transfer Operators to be paid N5 for every $1 received as remittance inflow.
Emefiele during the briefing announced the introduction of the Non-Oil FX 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.
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Tags: Bankers' Committee meetingNon-Oil FX Rebate SchemeRT200 FX Programme
Chike Olisah
Chike Olisah
For further inquiries about this article, contact: Email: chike.olisah@nairametrics.com Twitter: @ChikeOlisah

Comments 1
Oluseyi Boroffice February 11, 2022 at 5:03 pm
This move will of course lower the current exchange rate.

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CBN explains how diaspora remittances increased from $6 million to $100 million weekly
Chike Olisah by Chike Olisah February 10, 2022
Nigeria’s forex utilization falls 65% to $4.98 billion in Q1 2021
The Central Bank of Nigeria (CBN) has said that its foreign exchange policies especially the Naira4Dollar scheme has led to significant improvement in diaspora remittances into the country.

The apex bank revealed that diaspora inflow into Nigeria increased from an average of $6 million weekly in December 2020 to an average of more than $100 million weekly by January 2022.

This was disclosed by the CBN Governor, Godwin Emefiele, while speaking at a special press briefing at the end of the Bankers’ Committee meeting, on Thursday, February 10, 2022, at the CBN Headquarters in Abuja.

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What the CBN Government is saying about remittances
Emefiele in his statement noted that diaspora remittances fell significantly in the wake of the Covid-19 pandemic just as the foreign exchange earnings dropped greatly due to slump in exports and crash in oil prices.

He said, “This is understandable because to the extent that COVID-19 led to significant job losses in many advanced economies, diaspora remittances also suffered commensurate reductions in inflows into Nigeria.


“All these factors jointly explain the heightened pressures on the currencies of major emerging market countries, including Nigeria.”

The CBN Governor noted that the lessons that have been learnt from its policies on remittances, which were initiated due to the inadequacy of forex supply and constant pressure on the country’s exchange rate, can be applied in improving some aspects of the foreign exchange inflow into the country.

He listed the 4 major sources of forex inflow into Nigeria to include; Proceeds from oil exports, Proceeds from non-oil exports, Diaspora remittances and Foreign Direct/Portfolio Investments.


What you should know
Recall that the CBN, in a circular to all Deposit Money Banks (DMB) and International Money Transfer Operators (IMTO), in March 2021, introduced a ‘Naira 4 Dollar Scheme’ for diaspora remittances,  which offers recipients of diaspora remittances through CBN’s IMTOs to be paid N5 for every $1 received as remittance inflow.
It was introduced to encourage recipients of dollars to use formal banking channels and help the CBN capture such inflows to boost the liquidity of the forex market and ensure the stability of the Naira, which has been under pressure after the crash of oil prices last year due to the pandemic

https://nairametrics.com/2022/02/11/cbn-to-stop-sale-of-foreign-exchange-to-banks-by-end-of-2022/