February 15, 2022/United Capital Research

In the past few weeks, Nigeria’s external reserves have continued to slide from a four-month peak of $41.8bn to $39.9bn in Jan-2022. In our daily insight titled “Nigeria’s Falling External Reserves”, we clearly elucidated the pressures confronting the CBN including rising import bills, weak oil production and weak FPI flows. This has also been made evident in the bank’s recent policies which have import substitution and export promotion as exclusive objectives. Thus, following the conclusion of the Bankers Committee Meeting held last week, the CBN Governor in a press briefing introduced a new FX policy called “RT200 FX Programme“, which stands for the “Race to US$200 billion in FX Repatriation. In a three-part series, we would provide clarity on the framework of the policy as well as provide perspectives on possibilities of success, challenges likely to be encountered as well as possible solutions.

The RT200 FX Programme in design is a set of policies and plans aimed toward improving proceeds from non-oil exports, which represents one of the four major sources of FX inflow into Nigeria. This is also part of efforts to reduce dependence on oil exports thereby facilitating further stability in the country’s exchange rate, which already is largely influenced by oil price volatility and other dynamics. Via the implementation of the policy, the CBN aims to generate $200.0bn worth of FX inflows over the next three to five years. In a bid to achieve this, the CBN has outlined five anchors that will serve as an implementation base for the RT200 policy, and they include, 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 first anchor, the Value-Adding Export facility would 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 non-oil commodities before exportation. In addition, the Non-Oil Commodities Expansion Facility is a concessionary facility that would adopt a prioritization framework to drive the mass production of targeted exportable commodities. Also, this facility would help moderate the prices of the commodities in the local market.