Why CBN’s Many Initiatives To Boost Export Earnings Failed
Experts have blamed Nigeria’s inability to significantly boost non-oil export earnings on chronic inefficiency in production and value addition.
They spoke at the just concluded 2022 annual conference of the Finance Correspondents Association of Nigeria (FICAN), where they explained why the many intervention initiatives of the Central Bank of Nigeria (CBN) to boost non-oil export earnings failed to yield the desired result, leaving the country grappling with foreign exchange scarcity.
According to the economic experts drawn from the key sectors of the economy, export earnings can only improve if the country makes a conscious effort to add value to its exports.
According to them, the country’s export products are exported in their raw state with minimum returns compared to countries that add value before exporting to other countries.
CBN’s Principal Manager, Trade and Exchange Department, Anne Nnenna Ezkañnagha, stated that it is not enough to keep exporting raw materials, stressing that the country needs to add value to her exports so that the products will be more competitive at the global trade spheres.
Ezkañnagha who represented the CBN at the event noted that in a modern global economy, only countries which add value make more returns in their export earnings.
She said “It is not enough in the modern global economy for us to keep exporting raw materials. We need to add value so that our products will be more competitive when we get to the international trades sphere.”
It is against this backdrop, she said, the CBN rolled out a new intervention tagged “100 For 100” this year.
“With this new initiative, CBN is looking into facilitating 100 companies every quarter to expand on their export competitiveness,” Ezkañnagha explained.
She stressed that the CBN has been intervening in so many ways to improve value addition, particularly the agricultural products of Small and Medium Scale Enterprises (SMEs) operators
The Godwin Emefiele-led apex bank has had several intervention initiatives in order to rescue the struggling economy from perennial scarcity of foreign exchange.
Among CBN’s many interventions is the Race to $200billion in FX Repatriation (RT-200FX) scheme with monetised reward to encourage informal exporters to come under the formal sector so as to be properly captured.
The programme operated through different facilities such as a value-added export facility, non-oil commodities expansion facility, non-oil FX rebate scheme and biannual non-oil export summit, was expected to stimulate non-oil exports with a $200 billion FX income target in about three to five years.
The CBN believed that due to the large disparities between the exporters of raw commodities and exporters of semi-finished products, adopting the schemes and facilities would help boost Nigeria’s foreign exchange value chain.
CBN’s second facility which is the non-oil commodities expansion facility is a concessionary facility designed to specifically boost local production of exportable commodities.
With this facility, CBN governor, Emefiele, had targeted to ensure that expanded and new factories financed by the value-added facility are not starved of inbuilt raw commodities in their production cycle.
But since the flag-off of these initiatives early this year, Nigeria’s foreign exchange crisis has never abated. Instead, the foreign exchange crisis reached a crescendo recently when foreign airlines threatened to shut down flight operations in Nigeria over the inability to repatriate about $456million in earnings.
Coming on the heels of the RT-200FX scheme, the “100 For 100 Intervention Scheme” seeks to incentivize the repatriation of export earnings back into the country.
Highlighting reasons why several initiatives to boost non-oil foreign exchange earnings failed, Nigerian Export and Import (NEXIM) Bank’s Head of Strategy and Corporate Communications, Tayo Omidiji, noted that the country has several commodities that, if properly harnessed, can make enough revenue to replace oil in the event that its major foreign exchange earner dries up.
Omidiji who represented the development finance institution at the workshop pointed out however that production inefficiency has been the bane of otherwise laudable initiatives of the government and its numerous agencies.
He said “What inefficiency does is that it adds to our cost. Even though we produce several commodities as number one, we may not be able to export them competitively compared to other countries because they use technology,” Omidiji explained.
Also speaking, the Deputy Director, Nigerian Shippers Council, Adora Nwonu, said that in this new era of the planned kick-off of the African Continental Free Trade Agreements (ACFTA), Nigeria as a subscribing member must produce at the least cost so that when goods produced locally get to other participating countries, it has to be the best choice for consumers in terms of quality and cost.
Adaora who heads the Council’s Trade Services Consumers Affairs Department explained that part of the necessary things to do to become competitive is to have a regional carrier that will ship the products coming from the subregion at competitive cost and time.
To this end, the Chambers of Commerce and Industry in West and Central African regions have signed an agreement to acquire an indigenous carrier that will undertake to ship members’ products.
This agreement, she said, comes under the name tag of C-Link referring to all the countries of the subregion linked to the trade and commerce initiative.