New Telegraph

CBN: Intensifying export diversification for growth

Even before the onset of the COVID-19 crisis, the Central Bank of Nigeria (CBN), under the leadership of its current Governor, Mr. Godwin Emefiele, had consistently emphasised that export diversification was key to ensuring sustainable economic growth, writes TONY CHUKWUNYEM

Nigeria might have exited recession in Q4’20 with Gross Domestic Product (GDP) growth of 0.11 per cent after two consecutive quarters of negative growth, according to National Bureau of Statistics (NBS)’ data. However, as most financial experts readily acknowledge, the NBS numbers clearly indicate that the economy remains on a fragile recovery path and that the country’s fiscal and monetary authorities must step up measures, this year, especially in reducing the nation’s dependence on crude oil, in order to stimulate growth. Predictably, the subject was the focus of the special summit on the economy organised by the Central Bank of Nigeria (CBN)/ Bankers’ Committee in collaboration with other organisations, which held both physically and virtually in Lagos, last Friday. The theme of the event, which was attended by prominent personalities such as, the Vice President, Professor Yemi Osinbajo, the CBN Governor, Mr. Godwin Emefiele, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, several state governors and some members of President Muhammadu Buhari’s Economic Advisory Council (EAC), was “How to overcome the pitfalls of recession.”

Emefiele’s pledge

In his speech at the event, Emefiele, who stressed that the fiscal and monetary measures introduced by the country’s authorities to respond to the COVID-19 crisis were primarily responsible for the country’s quick exit from recession, listed measures, which, according to him, are key to sustaining the recovery. The measures include sustaining the accommodative fiscal and monetary policy measures aimed at improving access to finance to households and businesses; preventing resurgence in COVID-19 related cases; ensuring that a significant number of Nigerians is properly vaccinated and improving foreign exchange inflows into the country. On the regulator’s plans to improve foreign exchange inflows, he said: “The CBN intends to support measures that will improve our non-oil export earnings significantly. As a result, we intend to aggressively implement our N500 billion facility aimed at supporting the growth of our non-oil exports, which will help to improve non-oil export earnings. Exporters will be further encouraged to repatriate their export proceeds as stipulated under our extant laws. The CBN will continue to ensure that exporters have unfettered access to their export proceeds.”

ESF and RRF

The CBN had, in 2016, introduced the N500 billion Non-oil Export Stimulation Facility (NESF), as well as the N50 billion Export Rediscounting and Refinancing Facility (RRF), to engender growth in the non-oil sector of the economy and drive its foreign reserve accretion. Specifically, the apex bank said it introduced the NESF to diversify the revenue base of the economy and to expedite the growth and development of the non-oil export sector, adding that the facility will help redress the declining export financing and enable the sector increase its contribution to economic development. According to the apex bank, the objectives of the facility include improving access for exporters to concessionary finance to expand and diversify the non-oil export baskets; attract new investments and encourage re-investments in value-added nonoil exports production and non-traditional exports; shore up non-oil export sector productivity and create more jobs; support non-oil exportoriented companies to upscale and expand their export operations as well as capabilities and broaden the scope of export financing instruments. Giving an update on both facilities in an interview with journalists in August 2017, Mr. Abba Bello, Managing Director/Chief Executive Officer of NEXIM, the export credit agency appointed as the managing agent of the facilities, said at the time that it had received applications worth N111.02 billion under ESF and N3.59 billion under RRF. He further stated that of the applications received, NEXIM had “concluded appraisals and forwarded for CBN consideration, approval and disbursement applications worthN33 billion, under ESF and N3.59 billion under RRF.”

N200bn export facilitation initiative for cash crop farmers

However, apart from the ESF and the RRF, the Bankers’ Committee, in collaboration with CBN, had in April 2019, announced a N200 billion Export Facilitation Initiative (EFI) to boost production and export of five cash crops: Cocoa, oil palm, shea butter, sesame seed and cashew. Announcing the plan to journalists at a press conference, the Chief Executive Officer, United Bank for Africa (UBA), Mr. Kennedy Uzoka, said the N200 billion would be extended as loans to companies producing any of the five cash crops, at single digit interest rate for up to ten years tenor. He said: “As you know we have always talked about Nigeria been a mono economy, oil only, and many seminars have happened with so many resolutions. But the committee believes we have not made much progress in this direction. “In terms of the policies that drive exports, we believe that a lot of them have to be changed. And we know about the congestion at the port. So we looked at all these things and we broke them into immediate, medium and long term because some we cannot address within a short period. Fortunately CBN has different kind of funds. We looked at the existing funding structure so that we don’t reinvent the wheel, and see which of these funds can address the current challenges. And we did find a lot.” Indeed, the framework for the EFI showed that, under the initiative, farmers and value chain industries that are into cocoa, cashew, palm oil, Shea and sesame seed would be able to get funding with a single interest rate of nine per cent spanning between one year and 10 years tenor. It stated that commodities were to be funded under the approved guidelines of some of CBN’s intervention programmes such as the Agricultural/Small and Medium Enterprises Investment Scheme (AGSMEIS), Non-Oil Export Stimulation Facility (NESF) and the Real Sector Support Facility- Differentiated Cash Reserves Requirement (RSSF-DCRR). In addition, the EFIFF stipulated that small holder farmers operating in clusters along with medium and large sized companies were eligible to apply. It also stated that for the large and midsized players, funding would be made available for land acquisition and cultivation (facility A), adding that funding would be made available for milling and refining capacity (facility B).

10 key commodities

Furthermore, that CBN was fully committed to promoting non-oil exports could also be seen from the fact that following his reappointment for a second term in office in June 2019, Emefiele, while unveiling his agenda for 2019-2024, disclosed that one of the key areas that the apex bank would pay particular attention to, was on how to build on the success of its intervention programmes in the agricultural sector, to help diversify the country’s export earnings. He said: “Building on the success of our Anchor Borrowers’ Programme (ABP) and other intervention programmes geared towards supporting the growth of our agriculture and manufacturing sectors, we intend to boost productivity growth through the provision of improved seedlings, as well as access to finance for rural farmers in the agricultural sector, across 10 different commodities namely: Rice, maize, cassava, cocoa, tomato, cotton, oil-palm, poultry, fish, and livestock/ dairy. “Our choice of these 10 crops is driven by the amount spent on the importation of these items into the country, and the over 10 million jobs that could be created over the next five years if efforts are made to expand cultivation and processing of these items in Nigeria. So far, we have held series of engagements with importers and producers of these products. Most of them have committed that they would install or expand their production capacities in Nigeria. We believe these measures will help to boost not only our domestic outputs but also improve our annual nonoil exports receipts from $2 billion in 2018 to $12 billion by 2023.” In addition, Emefiele’s comments while speaking with journalists during an interactive session in April, last year, are noteworthy. Describing the COVID-19 crisis as a golden opportunity for Nigeria to reset, he said: “As we start a new journey towards industrialisation, as the largest economy on the continent, this is an opportunity to get our manufacturing sector to work; to get our banks to work efficiently to support economy growth and development. So that by the time the African Continental Free Trade Area (AFCFTA) comes on stream, Nigeria will be adequately prepared.

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