With Nigeria’s economy on edge, the introduction of theRT200, and Tertiary Institutions Empowerment Scheme (TIES), by the Central Bank of Nigeria (CBN) has given the economy the much needed fillip; BENJAMIN UMUTEME writes.
It is no news that Nigeria’s economy is at tipping point due to internal and external shocks, mainly from weak exports, an almost non-existence real sector, insecurity, impact of COVID-19, oil theft and pipeline vandalism, currency speculators, and a burgeoning debt profile that stands at N42.84 trillion ($103.31 billion).
These all have combined to drive up unemployment to about 33 per cent and still counting.
With oil revenue on the downward trend due to massive oil theft, it is obvious that Nigeria urgently needs to diversify its revenue source.
Experts have warned that except authorities shore up revenue source, the country may start defaulting on its debt servicing obligation.
As a rescue effort, the Central Bank of Nigeria has administered various monetary policy pills to heal the economy and boost its growth.
It is instructive to state that for the past 7 years under the leadership of President Muhammadu Buhari, the Governor of the Central Bank of Nigeria Godwin Emefiele has made significant efforts at reducing the nation’s over-dependence on imports for foods and industrial raw materials towards not just self-sufficiency but self-reliance also.
In line with this commitment, the Apex Bank continues to roll out various policies, in form of interventions to finance priority sectors of the economy.
Among them are the RT200 (Race to $200 billion forex inflows), which is a foreign exchange repatriation initiative that aims to boost non-oil exports; and the Tertiary Institutions Empowerment Scheme (TIES) that intends to wean undergraduates and graduates of white-collar jobs addiction, thereby causing them direct their energy to being their own boss, and in the process create jobs ultimately growing the economy.
The RT 200 programme, birthed by the CBN and Bankers’ Committee in February, aims to raise $200 billion in foreign exchange earnings over the next three to five years from non-oil proceeds.
With unreliable accruals in the Foreign Exchange (FX) reserves; shrinking from $39,650 billion in April to $38,540 billion in May 2022, and compounded by the volatile exchange rate of the naira, the policy has been applauded by keen economic watchers, who described it as a masterstroke that will ultimately fatten the FX reserves.
This shift in strategy, at a time the naira is succumbing to the vagaries of the global crude oil market and in-country inflationary pressure, is one bold effort to divert the economy by strengthening investors in the non-oil sector whose products are destined for offshore markets.
Apart from the value addition of these products, the RT 200 policy mandates exporters to meet international export standards before qualifying to earn the maximum benefits equal to the earnings of competing exporters of rival products from other countries.
The policy is borne out of the need to mainstream export-bound non-oil sector products as a means of earning more stable and sustainable FX inflows to insulate the Nigerian economy from crippling shocks and FX shortages. The desired outcome would be to enhance foreign exchange inflow, diversify the sources of FX inflow, increase the level of contribution of non-oil exports to economic growth and Gross Domestic Product, ensure stability and sustainability of FX inflows, and support export-oriented companies to expand their export operations and capabilities.
Speaking in Lagos recently, the CBN boss disclosed that $4.987 billion has been repatriated into the country by non-oil exporters in 2022.
The figure is significantly higher than the $3.19 billion repatriated in 2021. He, however, explained that only $1.966 billion of this amount qualified for the rebate programme, just as he added that only $1.559 billion was sold at the Investors & Exporters (I&E) window or for own use. He further noted that the CBN had equally paid out about N81 billion in rebates to Nigerian exporters.
The CBN Governor called for greater collaboration and coordination on policies to improve the economic activities in the non-oil sector, stressing that “export could transform the economic structure of countries from simple, slow-growing, and low-value activities to more productive activities that enjoy more significant margins driven by technology.”
According to him, now is the time for all stakeholders to work together to reposition Nigeria on a growth trajectory by taking the diversification of the economy seriously, stating that policymakers must help exporters and the economy by adding value to what the country produces and exports.
Reiterating the need for a more diversified economy, Mr. Emefiele also emphasized the need to improve the country’s road infrastructure, with an emphasis on road infrastructure from the ports, to facilitate the ease of transporting goods for export.
He disclosed that feedback from Banks indicated interest by exporters in adding value to the products they export, to allow them to benefit from the programme. He, therefore, encouraged more exporters to find ways to add value to their exports so that they too could benefit from the scheme and get greater value for their exports.
He urged participants to share innovative suggestions for exploring the non-oil export sector as a more sustainable means of increasing financial flows into the economy and generating employment to spur growth.
The incentives available to qualified companies in the RT 200 scheme are derived from quarterly payment by the CBN of N65 for every $1 repatriated and sold at the Investors’ and Exporters’ (I & E) Window to Authorized Dealer Bank (ADB) for other third-party use, and N35 for every $1 repatriated and sold into (I & E) window for the Exporter’s use on eligible transactions only. Of course, the incentive payments for every dollar repatriated and sold at the designated banks encourage repatriation of profits and discourage capital flights just as it ensures an adequate account of repatriated FX to fund economic growth rather than being frittered away in the open FX black market.
Tertiary Institutions Empowerment Scheme
In realization of this, the CBN has introduced several innovative financing programmes designed to extend low-cost financing to youth entrepreneurs across the country. These interventions have continued to receive resounding commendations, as they have proven effective in extending credit to youth entrepreneurs across the country.
One of them is the CBN’s Tertiary Institutions Empowerment Scheme (TIES).
The objective of the TIES is to provide undergraduates and graduates with a platform to access loans. Access to capital for undergraduates and graduates with innovative entrepreneurial and technological ideas has always been a challenge for young graduates with tertiary institutions.
According to the CBN Governor, only those with a Nigerian polytechnic or university degree will be considered. Also, priority will be given to innovative entrepreneurial activities with high potential for export, job creation and transformational impact.
For the biennial regional and national entrepreneurship competitions, the CBN would choose a Body of Experts (BoE) from the corporate and governmental sectors to assess entrepreneurial and technology innovations submitted by Nigerians.
The BoE will review the submitted applications through engagements that feature undergraduates competing by pitching entrepreneurial and technology innovations at regional levels, with finalists progressing to the national event for final consideration and ranking by the BoE.
The Lagos State Governor, Mr. Babajide Sanwo-Olu, at the Bankers’ Committee dinner lauded the CBN and the Bankers’ Committee for keeping their collective promise to keep supporting the efforts by the federal government and states, especially Lagos, to promote growth in the economy, with emphasis on job creation.
For Nigeria’s first Professor of the Capital Market Uche Uwaleke, the Nigerian economy which is currently challenged by rising inflation, tepid economic growth, exchange rate volatility, widening budget imbalance/deficit, increasing poverty, unemployment needs authorities to align monetary and fiscal policies.
According to him, “The CBN should scale up its development finance interventions in agriculture and Micro, Small and Medium Enterprises (MSMEs) after a thorough evaluation of existing ones.
“Actively engaging the private sector in massive infrastructure projects especially roads and railways.”
Latest figures on intervention spending by the Apex Bank shows that between September and October 2022, under the Anchor Borrowers’ Programme (ABP), the Bank disbursed N41.02 billion to several agricultural projects, bringing the cumulative disbursement under the Programme to ₦1,067.29 billion to over 4.6 million smallholder farmers cultivating 21 commodities across the country. The Bank also disbursed N0.30 billion to finance large-scale agricultural projects under the Commercial Agriculture Credit Scheme (CACS). Consequently, the total disbursement under the Scheme for agro-production and agro-processing stands at ₦745.31 billion for 680 projects.
In addition, the Bank released the sum of ₦48.30 billion under the ₦1.0 trillion Real Sector Facility to seven new real sector projects in agriculture, manufacturing, and services. Cumulative disbursement under this facility currently stands at ₦2.15 trillion to 437 projects across the country, comprising projects in manufacturing (240), agriculture (91), services (93) and mining sector (13). Furthermore, under the 100 for 100 Policy on Production and Productivity (PPP), the Bank disbursed the sum of ₦20.78 billion to nine projects in healthcare, manufacturing, and services. The cumulative disbursement under the Facility therefore, amounted to ₦114.17 billion in 71 projects.
Moreover, the Bank disbursed ₦4.00 billion under the Intervention Facility for the National Gas Expansion Programme (IFNGEP) to promote the adoption of compressed natural gas (CNG) for transportation and liquefied petroleum gas (LPG) for cooking.
In support of the resilience of the healthcare sector, the Bank also disbursed ₦5.02 billion to four (4) healthcare projects under the Healthcare Sector Intervention Facility (HSIF), bringing the cumulative disbursement to ₦135.56 billion for 135 projects in pharmaceuticals (33), hospitals (60) and other services (42).
Under the Micro, Small and Medium Enterprises (MSME) sector, the Bank provided support for entrepreneurship development with the disbursement of N1.33 billion and N10.00 million under the Agribusiness/Small and Medium Enterprise Investment Scheme (AgSMEIS) and Micro, Small, and Medium Enterprise Development Fund (MSMEDF), respectively. Hence, the total disbursement under these interventions amounted to N150.22 billion and N96.08 billion, respectively. Under the Export Facilitation Initiative (EFI), the Bank provided support for export-oriented projects to the tune of N5.34 billion, such that the cumulative disbursement under this intervention stands at N44.58 billion.
