The Central Bank of Nigeria (CBN) has upped its strategies at ensuring that exporters repatriated their proceeds through the Importers and Exporters (I&E) forex window. The apex bank on Friday announced it has designed a rebate scheme to incentivize exporters operating in the non-oil sector.
In its Race to $200 billion (RT200) foreign exchange repatriation from non-oil proceeds over the next 3-5 years, the CBN declared it will pay N65 for every US$1 repatriated and sold at the I&E Forex Window to Authorised Dealer Banks (ADBs) for other third party use. While N35 will be paid for every US$1 repatriated and sold into I&E Window for personal use on eligible transactions. The spread should not be more than 10kobo, the apex bank warned.
Explaining the reasons for the scheme, the central bank said it was borne out of the need to stabilise forex earnings, ensure sustainable forex inflows and insulate the Nigerian economy from shocks and persistent forex shortages.
Investors King understands that the CBN’s new rebate scheme is aimed at discouraging exporters from patronising the parallel market for their forex needs and reining in the wide foreign exchange rates. Through the initiative, the central bank plans to improve economic productivity, increase new job creation in the non-oil sector and support the Federal Government’s ongoing diversification plan.
Here is the logic, the idea of the rebate is to close the forex differential between the official and the black market rates. Presently, the Naira to Dollar exchange rate is at N565 at the black market whereas at the I&E window it was about N416 to N420 before the website went offline. Meaning, the N65 rebate will bring the Naira to dollar exchange rate at that section of forex to about N485/$. This, plus the uncertainty surrounding black market transactions are likely to compel a certain portion of exporters to embrace the I&E Window for their forex needs, at least that is what the apex bank is banking on.
Objectives of CBN Non-Oil Rebate Repatriation Scheme
- To enhance foreign exchange inflow
- Diversify the sources of FX inflow
- To increase the level of contribution of non-oil exports
- Support export-oriented companies to expand their export operations and capabilities
- Only exporters of finished and semi-finished goods are eligible for this incentive.
- Exporters shall qualify for the rebates only, where repatriated export proceeds are sold at the Investors’ & Exporters’ Window.
- Export of finished and semi-finished goods wholly or partly processed or manufactured in Nigeria, except otherwise stated by the CBN.
- Export of goods and services (I.T and Creative Businesses) that are permissible and excluded under existing export prohibition list.
- Completion of e-Form NXP
- Registration with Corporate Affairs Commission (CAC) and Nigeria Export Promotion Council (NEPC)
- Sale of repatriated export proceeds at the I&E Window
CBN Refutes Rumours Of Naira Replacement
The Central Bank of Nigeria (CBN) has on Saturday, refuted rumours that it planned to replace the Naira notes in circulation with digital currency, otherwise known as the eNaira, in due course.
The apex bank, through its CBN Director, Corporate Communications Department, Mr Osita Nwanisobi, said the statement released, supposedly during the stakeholders’ engagement on eNaira adoption in Asaba, Delta was “misconstrued” and therefore called on the public to completely disregard it.
Nwanisobi said: “The digital version of the naira is meant to complement the existing currency notes and therefore, will circulate simultaneously as means of exchange and store of value.
“The digital legal tender aside from the safety and speedy features, it will also ensure greater access to financial services by the underbanked and unbanked populace thereby enhancing financial inclusion”.
He therefore urged members of the public and business owners to embrace the digital currency, the eNaira as it offers more possibilities.
Investors King recalls that in the early hours of Saturday, the Delta State Branch Controller of CBN, Mr Godwin Okafor, had revealed that the Paper currency (Naira) will soon be out of circulation, urging citizens to patronise e-Naira.
Godwin had explained that the bank is the market to further educate the people on the use and importance of the digital currency which is fully backed by the apex bank, unlike Bitcoin which has no legal backing.
He had made the statement at the popular Ogbogonogo market, Delta, during the market sensitisation on e-Naira.
“Paper currency will soon be out of circulation because CBN spent money to print money and people abuse the currency in the market, spraying at the occasion, payment of Okada/tricycle and others and CBN is losing”, he had revealed.
“Paper Currency Will Soon be Out of Circulation” – CBN Official
Delta State Branch Controller of Central Bank of Nigeria (CBN), Mr Godwin Okafor, has revealed that the Paper currency, (Naira) will soon be out of circulation, urging citizens to patronize e-Naira.
Mr Godwin explained this at the famous Ogbogonogo market, Delta, during the market sensitisation on e-Naira.
“We are here at the market today to sensitise the market people on the use of e-Naira. It is fully backed by CBN, unlike Bitcoin which has no legal backing,” he said.
“Paper currency will soon be out of circulation because CBN spent money to print money and people abuse the currency in the market, spraying at the occasion, payment of Okada/tricycle and others and CBN is losing.”
In relation to this, Investors King had reported the President’s statement on the importance of the e-Naira to the country’s economy. President Buhari said the launching of the E-Naira makes Nigeria the first country in Africa and one of the first few countries in the world to launch a digital currency.
He further said he expects the currency to enable the government to send direct payments to citizens eligible for government welfare programs as well as foster cross-border trade and assist in moving many more people and businesses from the informal sector into the formal sector, therefore, increasing the tax base of the country.
Further, he explained that being a digital currency, it has the potential to increase Nigeria’s GDP by $29 billion over the next 10 years.
Dr. Aminu Bizi, a CBN e-Naira expert, said Delta was chosen as the second state after Lagos to sensitize market women on the currency.
He said the use of e-Naira was effective, charges free unlike ATM and POS and cannot be hacked by fraudsters.
Secretary to the State Government, Chief Patrick Ukah, praised the CBN for the e-Naira project in his remarks.
He expressed his satisfaction with CBN programs, characterizing e-Naira as a “laudable” initiative that has elevated Nigeria’s position in international finance.
Naira Exchange Rate Dips at Official Market and Black Market
The Nigerian Naira opened the week lower against the United States Dollar at the Investors and Exporters (I&E) foreign exchange window now adopted as the official forex window and also at the black market.
The local currency opened at N417.30 against the United States Dollar before declining by 0.60% to close the day at N421.50/$ at the I&E window. Forex traders at the window transacted forex worth $70.68 million on Monday.
For banks and international money transfer operators, the Central Bank of Nigeria buys US Dollars at N414.75 and sells at N415.75. The apex bank buys and sells Pounds Sterling N508.2761 and N509.5016, respectively. For the European common currency, the Euro, the central bank sold it at N433.0453 and acquired it at N432.0036 a unit.
At the parallel market popularly known as the black market, the Naira was exchanged at N599 for a United States Dollar in Abuja.
Speaking on why the exchange rate is that high, Abu Abdullahi, a currency trader at Zone 4 in Abuja, said demand for the U.S. Dollar is high despite persistent scarcity.
Crude oil extended its gain in the early hours of Tuesday on optimism that China, the world’s largest importer of the commodity, would see substantial demand recovery after the latest data pointed to slowing COVID-19 infections in the hardest-hit areas.
Brent crude oil, the international benchmark for Nigerian crude oil, gained $2.69, or 2.4% to $114.24 a barrel at 5 am Nigerian time. The U.S. West Texas Intermediate (WTI) crude rose $3.71, or 3.4%, to $114.20 a barrel, Investors King understands.
“We are seeing a lot of signals that demand will start returning in that region, supporting higher prices,” said Bob Yawger, director of energy futures at Mizuho.
Finally, Bitcoin and other cryptocurrencies shake off Luna-led decline to pare losses on Tuesday. Luna Foundation Guard (LFG) announced in the late hours of Monday that it was discontinuing Luna Coin and stablecoin (UST) operations to launch a new blockchain protocol that would focus on developers and building in general.
The announcement marked the end of one of the most promising cryptocurrency projects and once again reminds the world of how vulnerable the cryptocurrency space is — regardless of what creators say.
Bitcoin gained 1.99% to $30,366 per coin while Eth, a token of Ethereum, XRP (token of Ripple) and Solana appreciated by 3.15%, 3.25% and 4.39% to close at $2,084.27, $0.431744 and $55.86, respectively.
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