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
Eligibility Criteria
- 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.
Eligible Transactions
- 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