March 3, 2022/United Capital Research
Following the three-part series of our insight on CBN’s RT 200 FX Programme, we provided clarity on the purpose, the anchors, possibilities of success, and challenges to be encountered in the programme. Since then, the CBN has announced modalities on which one of the anchors “the Non-Oil Exports Proceeds Repatriation Rebate Scheme” will run. As an extension to our earlier series, we expatiate on the operating guidelines released by the CBN in a circular on Monday.
On its operating guidelines, transactions eligible for incentives under the scheme must be exports of finished and semi-finished goods wholly or partly processed or manufactured in Nigeria. Furthermore, these transactions must be registered with Corporate Affairs Commission (CAC) and Nigeria Export Promotion Council (NEPC). Also, exporters will qualify for the rebates only where repatriated export proceeds are sold at the Investors’ and Exporters’ (I&E) Window. When the export proceeds are sold, the CBN would give the exporter N65 for every $1 sold to ADBs for third-party use and N35 for own use. Payment of these incentives would be made on a quarterly basis. This policy is similar to the CBN’s Naira 4 Dollar scheme introduced to attract remittance inflows.
In our view, The CBN’s offer of N65 for every dollar repatriated by exporters of agricultural products is an interesting development given it means exporters will be getting c.N485/$ for their export proceeds (I&E window rate of N420/$ plus the N65/$ rebate). However, it remains below the parallel market rate of N565/$ (the rate at which dealers buy from sellers) by c.16.5% which means exporters may continue to prefer to sell their proceeds at the parallel market. That said, we note that the other incentives from the CBN such as single-digit credit and access to cheaper FX for business activities could be potential sweeteners for exporters to shun the parallel market.
