The Lagos Chamber of Commerce and Industry (LCCI) has engaged the Central Bank of Nigeria (CBN) seeking review of its policy on repatriation of export proceeds with a view to allowing exporters have free and unfettered access to their export proceeds.
The Director-General, LCCI Dr. Muda Yusuf, said there is need for the apex bank to rethink, or reevaluate its foreign exchange policy on the repatriation of export proceeds so as to drive non-oil exports. He said CBN’s policy on repatriation of export proceeds result in sharp practices and corruption in export documentation processes, with many exporters avoiding filling the Nigerian Export Proceeds Form (NXP), otherwise known as ‘Form NXP’.
Yusuf spoke at the Quarterly Workshop of Association of Business Editors in Nigeria (ABEN) held during the weekend at the Chartered Institute of Bankers of Nigeria (CIBN), Victoria Island, Lagos. The theme of the Workshop was “Strengthening Economic Recovery in a Pandemic through Aggressive Non-Oil Export Drive: Prospects and Challenges.” Dr. Yusuf, who was the Guest Speaker in his presentation, said one of the problems hindering non-oil export was CBN’s policy that disallows exporters from having free and unfettered access to their export proceeds. “You get your export proceeds and the CBN will be telling you that this is the exchange rate that they will need to convert your proceeds for you. It’s not fair. You are the owner of your money; you are the one that exported. If they cannot give you your dollar directly, then they should allow you negotiate the rate at which you sell the dollar rather than impose conversion rates on you,” Yusuf charged.
The CBN has a policy that requires exporters to repatriate their The policy has been in operation since the deregulation of the foreign exchange market in 1986. The CBN only dust up the policy through embargo on access to foreign exchange on exporters who fail to repatriate their proceeds when ever their is foreign exchange crunch. The CBN requires exporters to repatriate export proceeds within 90 days for oil and gas and 180 days for non-oil exports. Failure to do so constitutes a breach of the extant regulation. This is partly to stem capital flight through exports.
But the policy, which came in the wake of the shortage of foreign exchange in the country, forcing the apex bank to place its hopes on the remittance of export proceeds and Diaspora remittances, has not gone down well with exporters, particular the rate at which the exporters exchange their proceeds. Yusuf lamented that the current policy now is that once export proceed comes, it has to be exchanged at the Investors’ and Exporters’ (I&E) window, which is about N410/$ or thereabout, while the open market rate is about N480/$.
“Look at the difference and we said we want to encourage non-oil export? Is that not a deliberate disincentive?” Yusuf queried, noting that it’s not as if there is any major support to exporters who also go through many constraints to bring in their proceeds and the CBN now imposes a rate on them. The LCCI chief said this was why he has been canvassing that the kind of policy the CBN has done to support Nigerians in the Diaspora should be extend to exporters. “Even though you cannot give money to exporters to develop, just let them have access to their money. If they want to cash it, let them, cash it; let them take it to bureau de change operators or whatever. Isn’t it still in this economy?
The exporters would have gotten good value for their money. While noting that the push for a review of the export proceeds policy by the CBN is an ongoing advocacy, Yusuf said the LCCI hopes that the apex bank will have a rethink, “Because when you say people are not bringing back their proceeds, it’s partly because of this problem.”
According to him, there has been a lot of energy that are dissipated chasing exporters that they are not remitting their export proceeds. “There is what we call the NXP Form. When you are exporting, you have to fill the form so that when you are bringing the proceeds, it would have been documented that you have exported. “But many of them (exporters) were avoiding filling the ‘Form NXP,’ because there is a lot of intimidation whereas the simple solution should have been fill the form; when your proceeds come, you have free access to them.
But because people don’t want to be short-changed, they don’t want to declare their exports. LCCI DG said that some exporters decided to go to neighbouring countries such as Republic of Benin (Cotonou) and export from there. He, however, lamented that crossing the borders to export because of policies meant the Nigerian economy was losing, “Because if they move it through our own ports, at least, those who are carrying the loads or off-loading the containers will benefit from it.”
Yusuf, emphasised that Nigeria’s export policies must support what the country wants to achieve as far as export is concerned. “And I want to say that it is important to get our exporters to have full access to their export proceeds,” he said. According to him, this was necessary in order to drive non-oil export. “There is a positive relationship between Gross Domestic Product (GDP) performance and export performance. “If you see any economy that is making progress, go and check their export data. But regrettably, if you look at our export basket today in terms of value, oil & gas is accounting for almost 95 per cent,” he said, pointing out, however, that competitiveness is key to export.
“It’s about creating an environment that will make our export competitive, Yusuf emphasised, noting that part of the things that have been seen even in the nation’s limited export is the crowding out of indigenous players. His words: “We should have a deliberate policy to ensure that we mainstream indigenous players in all sectors. Even the non-oil export we are talking about, almost 80% of it has been taken over by Asians. Go and check with exporters, the main thing Nigerians are doing now maybe is just logistics, to help exporters carry and offload goods.
“The real business of moving these things is not in our hands, which is why we have a situation where non-oil export is accounting for just five per cent. If you take out oil & gas, that means we are not in any serious export business and that is beginning to reflect on what is happening now with our exchange rate. “What is sustainable is to create an environment of competitiveness.
That is what can make things happen in the non-oil export space and addressing issues of infrastructure, power, road, logistics, and of course, issues of policy and regulation. In terms of revenue, the non-oil economy is not doing so well. We are saying that you should chase people away, but that you should define boundaries so that you don’t crowd out the indigenous players.”
Delivering a paper on ‘Financing Nigerian Non-Oil Exporters to Penetrate Global Markets in a Pandemic,’ the Head, Strategic Planning, Nigerian Export–Import Bank (NEXIM), Mr. Tayo Omidiji, said NEXIM’s objective was to implement initiatives aimed at mitigating the impact of the pandemic on the non-oil export sector.
He said the Bank’s focus was therefore geared towards increasing the number of products in the nation’s export basket, while also increasing the number of export destinations, particularly within the context of the African Continental Free Trade Agreement. Omidiji said NEXIM supports the non-oil export sector through different products and services including Working Capital Facility, Stocking Facility, Foreign/Local Input Facility, ECOWAS Trade Support Facility, Long Term Project Finance Facility,, and Rediscounting & Refinancing Facility. He added that NEXIM, as an Export Credit Agency (ECA) and Nigeria’s Trade Policy Bank, also has an avalanche of export support funds such as the N500 Billion Export Stimulation Facility (ESF) managed in collaboration with the CBN to support export oriented projects.
There is also the N100 billion Export Development Fund (EDF) provided to NEXIM by CBN and targeted mostly at the Small & Medium Enterprises. Omidiji said the Bank, therefore, welcomes applications from bankable projects and exporters in its target sectors such as agriculture (agro-processing), manufacturing, solid minerals and services.