Central Bank of Nigeria (CBN) to stop the sales of forex to banks was communicated yesterday by its governor, Godwin Emefiele. CBN has announced that it will cease selling foreign currency to banks by the end of the year.
This will include dollars, euros, pounds, and others. The CBN governor said the banks must begin to source their forex from export proceeds.
He announced during a special press briefing at the end of the 364th Bankers Committee meeting on the launch of the bank’s new forex repatriation scheme, dubbed the ‘RT200 FX Programme,’ on Thursday, February 10, 2022, at its headquarters in Abuja.
As regards the foreign exchange market, for example on the inadequacy of FX supply and constant pressure on the exchange rate, we believe that the lesson we have learned from our policy on remittances can be applied in improving some aspects of our FX inflow into the country.
Four Major Sources of Forex Inflow Into Nigeria:
1. Proceeds from crude oil exports
2. Proceeds from non-oil exports
3. Diaspora remittances
4. Portfolio investment
According to Godwin Emefiele, these sources were adversely affected by covid 19.
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Why CBN Made the Decision to stop the Sales of Forex to Banks
The RT200 FX Programme, which also stands for the “Race to US$200 billion in FX Repatriation,” is a series of non-oil export policies, plans, and programs that will allow Nigeria to achieve a grand yet feasible goal of US$200 billion in FX repatriation, entirely from non-oil exports, over the next 5 years.
Emefiele stated that the decision was in line with the apex bank’s new commitment to increase the country’s foreign reserves through non-oil export proceeds.
According to experts, if the CBN’s new policy is implemented correctly, it will reduce pressure on the naira, increase productivity, expand exports, attract foreign exchange to the country, and create job opportunities.
The RT200 Programmes will have the following key anchors:
1. Value-adding export facility
2. Non-oil commodities expansion facility
3. Non-oil FX rebate scheme
4. Dedicated non-oil export terminal
5. Bi-annual non-oil export summit
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From the Mouth of Godwin Emefiele on the Sales of Forex to Banks
“The era is coming to an end when, because your customers require 100 million dollars in foreign exchange or 200 million dollars in foreign exchange, you want to pack all the dollars and pass them to the CBN to give you dollars is coming to an end.
It will end before or by the end of this year.” We will tell them not to come to the Central Bank for foreign exchange again; instead, they should go generate their export proceeds.
When those export proceeds arrive, we’ll fund them at 5% for you, and they’ll earn rebait.” Then you can sell the proceeds to your customers who are looking for a hundred million dollars. But if you continue to come to the Central Bank for dollars, we will stop you.”
“Nigeria cannot continue to depend on FX earnings to fund its import obligations from revenue coming from earnings from products where we cannot determine both price and quantity.’’
Emefiele told the bank executives present, including Access Bank’s Herbert Wigwe and Guaranty Trust Bank’s Segun Agbaje, “You must go and join the race, build your foreign exchange from your export customers to fund your import customers, that’s the best I can do to help.
Watch the video here.