Non-oil exporters have threatened to cease exports till restrictions limiting access to their proceeds from the interbank market are removed.The interbank market is the official window through which the Central Bank of Nigeria (CBN) trades on the nation’s currency against its international counterparts.
Efforts by the CBN to defend the naira may become futile if an export-import balance is not addressed under the Federal Government’s fiscal agenda, as speculators continue to mop up the apex bank’s dollar intervention in the parallel markets.
Already, continued mopping up of the apex bank’s dollar intervention by speculators has led to the naira depreciating further in value to N410 at the parallel market yesterday.
Decrying their plight, non-oil exporters stated that the CBN had made it difficult for them to access their earnings from exports at the prevailing parallel market value, thus making it a disincentive for operators, having bought raw materials from farmers at street value and added value before such products were exported. They said that their problems were compounded by competing with foreigners who are now buying commodities directly from farmers for exports.
If the situation is not addressed, the goal of the apex bank’s intervention in the forex market may be futile while the desire to attract foreign direct investments due to a stable currency may not be achieved. Also, the imbalance in import-export would further weigh in on the nation’s reserves, thereby prolonging the nation’s exit from recession.
Stakeholders in the non-oil export sector alleged that the CBN’s goal of saving the naira when the economy is weak is only a short-term palliative that would further enrich speculators’ pockets rather than encouraging activities that would boost forex inflow and enhance a balance of payments from import of goods and services.
The exporters also indicted regulatory agencies for not being up-to-date in terms of required standards of trade partners, adding that many of the trade partners exploit gaps in standardisation requirements to cheat and price commodities exported below international benchmark prices.
Despite auctioning several millions of dollars in the last few weeks, the CBN has been battling naira volatility brought on by low oil prices, which plunged the economy into a recession, even as the multiple exchange policy continues to mask the pressure the currency is under and made it difficult to attract inflows as investors struggle to price naira assets.
The Chairman, Export Group, Lagos Chamber of Commerce and Industry (LCCI), Dr. Obiora Madu, urged the CBN to revive the window for export proceeds, stating that the market prices of local commodities are higher than those of the international markets.
“We have always advocated a window for export proceeds. It was done before because exporters are not making money. The CBN should revive it as it is becoming more profitable to cut corners, with many exporters exploiting repatriation of proceeds to neighbouring African countries in order to access their dollars.
“The idea of foreigners directly sourcing commodities from the local farmers and markets is affecting commodity prices. Foreigners with soft funds are muzzling small businesses out of business. Politics will have to be right, regulation needs to come in and government needs to show commitment to its non-oil export agenda”, he added.
In an interview with The Guardian, the SME Group Chairman of the Lagos Chamber of Commerce and Industry (LCCI), Jon Kachikwu, chided government for its inability to live up to its expectations to businesses while expecting so much from operators.
He described the challenges faced by non-oil exporters to include the inability to repatriate dollars for their export proceeds, standardisation and infrastructure.
“ We now have a situation where exporters cannot have access to their repatriated dollars, yet non-exporters can access theirs.“The CBN tells you as the exporter to sell your repatriated dollars to the banks at N306/N308 as the case may be. The process of value-addition is tedious in itself. We have made several presentations to various stakeholders involved in promoting export but it seems they are only paying lip service to the issue since the nation is still earning revenue from oil.
“People involved in the semi-processed industry have challenges repatriating their funds and that has affected the volume of non-oil export and encouraged non-oil exporters to explore other means of doing businesses”, he added.
Another exporter who does not want his name to be mentioned says that the Federal Government is protecting non-oil exporters.“The CBN tells you to sell your proceeds at the interbank market or use it for import. This does not make any sense considering that incurred expenses were done at the prevailing black market rate. I did some transactions in January at the prevailing black market rate of about N500. Now, I am expecting the export proceeds this month. Will it be logical and profitable to sell at N306 or even at the prevailing black market rate, considering the costs also incurred?
“The negative perception of products from Nigeria also affects benchmark price for which such goods are sold, because they do not trust our standardisation practice here. Often times, exporters are exposed to losses when such goods get to their destinations. We need to balance our export vis-a-vis the import end to stabilise the currency rather than defending the naira”, he added.
To address lingering bottlenecks with exports, the Chief Executive Officer of the Nigerian Export Promotion Council (NEPC), Olusegun Awolowo said approval had been given by the presidency to clear outstanding debts and revive the Export Expansion Grant (EEG) scheme in order to increase non-oil exports in line with the zero oil plan and export promotion programmes.