In the first two parts of our series on the CBN’s RT200 FX Programme, we elucidated on objectives, framework, and mechanisms of the policy. In the concluding part of the series, we look to discuss the plausibility of the programme, challenges that may be encountered as well as possible solutions for those challenges. First, we believe the CBN’s new policy is a long-awaited panacea albeit from the wrong pioneer, in the quest to solve Nigeria’s agelong FX conundrum. Over time, we have highlighted how Nigeria needs to offer more to the global economy beyond oil to earn more FX revenue which would result in accretion to the external reserves, ensure a more stable source of FX inflows and ultimately strengthen the Naira. Thus, we reckon the policy’s aim to drive improved FX inflows from non-oil exports is a welcome development.
That said, opportunities yet untapped abound in the non-oil sector. For context, according to the most recent data on Nigeria’s Foreign Trade for 9M-2021, the percentage of non-oil exports to total exports stood at 11.0%. Also, the governor in his briefing acknowledged the inability of Nigerian farmers to add value to most of the raw cash crops they produce which reduces the amount they can earn. However, the inability to generate adequate FX inflow from non-oil exports over the years has been down to issues that may be beyond the ability of the CBN to resolve. The agricultural sector which appears to be the CBN’s focus has continued to underperform its potential due to unabating security nightmares, sub-standard farming practices & input, and infrastructural deficiencies. Also, issues around land use remain an unresolved conundrum. Similarly, another attractive non-oil sector is the mining sector remains bogged down by infrastructural & policy deficiencies as well as red-tapism.
To move forward, these issues require significant fiscal policymakers’ interventions. From our perspective, the success of the CBN’s RT200 FX Programme is largely subject to a collaborative effort between the Federal Government, State Governments and the CBN, in ensuring stringent implementation of the programme, supported by the immediate execution of already outlined anchors by the CBN.
