CBN’s I&E FX window tops BusinessDay 10 best ideas of 2017

by | January 15, 2018 1:45 am

BusinessDay is unveiling its ten best ideas for 2017 today with the setting up of the foreign exchange (FX) window for Investors and Exporters (I&E) topping the list of policies and ideas that impacted positively on the economy in general and Nigerians in particular.
The Investors & Exporters FX window was established by the Godwin Emefiele led Central Bank of Nigeria (CBN) in April 2017 on the aftermath of the foreign exchange crisis that hit the country following the 2014 global crash in the prices of crude oil, Nigeria’s main foreign exchange earner, and the exit of foreign portfolio investors from the country.
The new FX window for investors and exporters quickly lifted investor confidence in the foreign exchange market, improved price discovery, helped to attract dollar inflows from Foreign Portfolio Investors (FPIs), initiated the gradual re-introduction of a liquid inter-bank market and boosted production capacity in the manufacturing sector.
Stocks responded positively to the news, as the All Share Index rallied 1.97 percent the day following its introduction and gained 42 percent in 2017 overall.
The new window ensured timely execution and settlement of FX trades for eligible transactions as stipulated by the CBN. The operating modality is on a willing buyer, willing seller basis. The exchange rates of the transactions are as agreed between Authorised Dealers and their counterparties, which engendered transparency and liquidity.
The Central Bank of Nigeria’s Investors and Exporters foreign exchange window recorded approximately $26bn of transactions in 2017, according to the FMDQ OTC Securities Exchange data.
The supply of FX at the new window came from portfolio investors, exporters and authorized dealers (Deposit Money Banks), while transactions eligible to access the window include loan repayments, interest payments, dividend/income remittances, capital repatriation, bills for collection and other eligible invisible transactions as detailed under ‘miscellaneous payments’ in the CBN’s foreign exchange manual.
The naira which traded at a record N520 against the greenback on the black-market in February 2017, recovered to N365 after the introduction of the window, helping to restore confidence to the economy.
Other ideas which made the BusinessDay top ten list include: 

Voluntary assets and income declaration scheme (VAIDS) 

Due to the drive to boost government’s non-oil revenue base and restructure the Nigerian economy, the Voluntary Assets and Income Declaration Scheme (VAIDS) was launched in June 2017 by Vice President, Yemi Osinbajo and commenced on the 1st of July 2017 to last till March 31st 2018.
VAIDS is a time-bound (9 months) initiative designed to encourage voluntary disclosure of previously undisclosed assets and income for the purpose of payment of all outstanding tax liabilities.
In return for full declaration of previously undisclosed assets and income, tax payers will benefit from forgiveness of unsettled interest and penalties, and also the assurance they would not face criminal prosecution for tax offences.
According to the Joint Tax Board (JTB), as at May 2017 the total number of taxpayers in Nigeria was estimated to be 14 million out of an estimated population of 69.9 million who are economically active.
Through this scheme, the government intends to increase the number of taxpayers in the tax net and raise revenue, also raise the tax to GDP ratio which is currently at 6 percent, lower than what most countries record (South-Africa and Ghana inclusive).The scheme also aims expand the national tax base, Restrain non-compliance with existing tax laws and Discourage unlawful financial flows and tax evasion.
DMO’s strategy to reduce debt service costs
The DMO, in order to reduce the debt accrued to the federal government announced that N198 billion ($647 million) in maturing T/bills for the month of December will be redeemed leading to a drop in yields to 7 percent from the initial rate of 18 percent.
The N198.032 billion comprises of N131.415 billion and N66.617 billion of NTBs that matured on December 14, 2017 and December 21, 2017 respectively. Before now, the practice has been to rollover NTBs at maturity.
According to the DMO of $3 billion Eurobond was raised in November out of which $2.5 billion would be used to finance the 2017 budget and the balance to refinance domestic debts.
The debt refinancing is part of the DMO’s strategy to reduce debt service costs as well as to free up space in the domestic market for other borrowers and achieve a more sustainable debt portfolio mix of 60 percent Domestic and 40 percent External.
Mini Grid Law/Eligible Customer
Due to the loss of energy that results when Nigeria’s private Distribution Companies (Discos) fail to receive energy transmitted by the Government owned Transmission Company of Nigeria (TCN), the Nigerian Electricity Regulatory Commission (NERC) came up with Mini Grid Regulations.
It enables private individuals to register as Mini Grid Developers or Operators to distribute energy generated by the Mini Grid directly to Community Consumers.
The Regulation defines a Mini-Grid as any isolated Mini-Grid with its own generation capacity of between 0kw and 1MW that supplies electricity to more than one customer within or outside a Distribution Network.
The Mini Grid Developer/Operator either enters into agreements with the proposed consuming Community alone or tripartite contracts that involve the Disco, since Discos have licenses that give them rights over electricity distribution spanning mapped out geographical areas.

Upon an application, the Mini Grid Developer may be granted a Mini Grid Permit that subjects him to mandatory obligations. He may however decide to operate as a registered Mini Grid Operator and restrict his energy generation to a cap of 100kw.

The FG whistle-blower Programme

Corruption is of no doubt a grave issue in Nigeria, as the country falls in the top ten rank of the most corrupt countries in the world by transparency international.
In the bid to curb corruption in Nigeria, the whistle blower policy was introduced by the Federal Ministry of Finance with an aim to obtain information deemed to be in the public interest concerning embezzlement of public funds and assets as well as theft.
Identified whistle-blowers are given protection against any adverse treatment resulting from the disclosure as they can make complaint to an independent panel of inquiry. Whistle-blowers are however entitled to between 2.5 percent to 5 percent of recovered proceeds.
Since the inception of the policy, the FGN has been able to redeem huge amounts of money in various currencies including the Ikoyi whistleblowing case were about $43.5 million, £27,800 and N23.2 million was recovered through Economic and Financial Crime Commission (EFCC).

AERO Contractors MRO facility for maintaining Airplanes
Aero Contractors recently made history by undertaking the maintenance of Boeing aircraft at the C-check level in Nigeria, making it the first in the country.
Before now, major C-checks were carried out in Israel, Jordan, South Africa, Ethiopia, Morocco and America.
Aviation sources tell BusinessDay that airlines may be saving up to N2.85 billion a 30 percent reduction by using Aero Contractors new Maintenance, Repair and Overhaul (MRO) facility where checks on about 26 Boeing aircraft is expected to be carried out within a period of 18months.
E-Dividend policy

The E-dividend policy introduced was by Securities and Exchange Commission (SEC) with the aim to reduce the problem of unclaimed dividend by equity market investors which was estimated to be about N80 billion at the end of 2015.
The policy is one of the programmes set by SEC to regain retail investors’ confidence in the market
The E-dividend carried by SEC in collaboration with the central bank of Nigeria (CBN), committee of Heads of bank operations, Institute of capital market registrars and the Nigeria interbank settlement system ensures that all dividend are being into the bank accounts of investors that have completed the electronic dividend registration.
Credit registry
The National Assembly- the Senate and the House of Representatives in May, 25th 2017, passed into law the Credit Reporting Act and Collateral Registry Act which aim at affording Small and Medium Enterprises the opportunity of accessing loan facilities by providing/using movable assets as securities or what is known as collaterals to obtain loan facilities from financiers.
Prior to the enactment of these Acts, it was practically impossible for Micro Small and Medium Enterprises (MSMEs), to obtain loans from major financiers.
This was so because no financier could afford to part with a huge sum of money without securing his interest in the form of collaterals or securities, which could serve as a fall back option in the event of a breach by the borrower in the fulfilment of his obligations.
In 2015, the World Bank in its statistics and review of the benefits of MSMEs projected that MSMEs contribute up to 60 percent of total employments and up to 40 percent of national income, Gross Domestic Product (GDP) in emerging economies, which is inclusive of Nigeria. It further projected that these numbers are significantly higher when informal MSMEs are included and this can only be achieved when MSMEs can access credit facilities with available movable assets.
Removing Roundabouts in Lekki Axis
The Lekki-Epe road was conceived to accommodate about 30,000 vehicles per day, but the vehicular movement along the axis had since increased to over 50,000 daily, thus necessitating plans to mitigate the impact on traffic.
The traffic situation in the area was further worsened by delays occasioned by some roundabouts along the corridor.
 To enhance free flow of traffic along the corridor, the Governor Akinwunmi Ambode administration ordered the removal of the roundabouts with a view to freeing up more space for traffic.
Six roundabouts at Ikate, Chisco, Jakande, Igbo Efon, Chevron and Victoria Garden City (VGC) were consequently removed.
According to a report by a Lagos based construction firm, planet project limited, the removal of the six roundabouts along the Lekki-Epe expressway has saved residents and motorists in the corridor about N87 billion in a year or N240 million daily based on “journey time and fuel saving analysis.”
Visa on Arrival/ Ease of doing business
The Nigeria Immigration Service (NIS) in early 2017, introduced a liberalised online Visa on Arrival (VOA) facility to the public, especially foreign investors willing to invest in Nigeria.
The measure was part of the resolution of the Presidential Enabling Business Environment Council (PEBEC) aimed at attracting foreign investors to the country.
The World Bank’s 2018 Ease of doing Business index released on Tuesday 31 October 2017, showed that Nigeria implemented five reforms, the second highest in the period. One of the reforms was the successful implementation of the visa on arrival policy which bolstered one of the sub-indexes tracked by the World Bank-“The Entry and Exit of People.”
A visit by BusinessDay to the Murtala Muhammed International Airport (MMIA) showed that the policy is indeed living the talk. As investors queued with their documents, the NIS officials looked through their systems to ensure coherence with the papers presented by the investors.
Once the investors were cleared, they were automatically issued their visas.An investor who craved anonymity told BusinessDay that he was pleased with the development and he hopes this will be sustained.