Non-oil exports 6% contribution pushes CBN to float N550bn stimulation fund
by ODINAKA ANUDU
May 25, 2016 | 11:06 am| | | Start Conversation
PHOTO/DOC./PRO. PHOTO/APR. 10/IDRIS. L-R:COMMISSIONER FOR HEALTH LAGOS STATE, DR. JIDE IDRIS; CHAIRMAN, LAGOS STATE MEDICAL ADVISORY COMMITTEE, DR. ORE FALOMO; AND CHAIRMAN, EDENFIELD HEALTH FOUNDATION, MR. ITUAH IGHODALO, DURING THE PRESS CONFERENCE ON EKO FREE HEALTH MISSION, IN LAGOS... ON TUESDAY. PHOTO: SEGUN BAKARE
The dismal performance of the non-oil export has pushed Nigeria’s central bank to float N550 billion export funds to spike the sector and ensure it repatriates foreign exchange to the economy.
Non-oil export contributed only 6 percent to the total export between 2009 and 2015, according to CBN and NEXIM Bank figures. This means the dwindling oil and liquid products have occupied 94 percent of exports within six years, prompting an urgent need to fund non-oil sector to expand the economy.
In response to the call to boost the non-oil sector, the CBN and NEXIM Bank on Tuesday raised an export stimulation fund from N300 billion to N550 billion for exporters’ access. While N500 billion is for export stimulation facility, N50 billion is for export rediscounting and refinancing facility.
“We are doing this to boost the non-oil exports. The reasons are obvious: The drop in oil revenue means we need to pay more attention to non-oil exports to earn foreign exchange and revenue,” said Hope Yongo, technical adviser to acting CEO, Nigerian Import Export Bank (NEXIM Bank) at the stakeholders’ forum with manufacturing exporters in Lagos.
“53 percent of our exports come from only six products. So we need to expand our export basket. We are exporting but we are not adding value. Our commodities are exported on a discount market, rather than on the premium market. So, we want exporters to access this fund at between seven and nine percent,” said
Nigeria needs to export more of its finished products and agro commodities to earn FX as the country faces severe shortage owing to over 60 percent drop in oil prices.
Manufacturers are scavenging for FX with which to import inputs, plunging the economy into chaos.
“We need this fund now,” said Tunde Oyelola, chairman, MAN Export Group.
“With the continuous decline in the price of crude oil in the international market, diversification into non-oil export development remains the only productive alternative for most nations across the world, especially Nigeria,” Oyelola said, adding that manufacturing exporters who have Negotiable Duty Credit Certificates from the suspended Export Expansion Scheme should be allowed to use the certificates as collaterals.
According to data compiled by Cobalt International Services, the non-oil export revenue of Africa’s biggest economy and oil producer fell from $350.86 million obtained in 2014 to $154.47 million in 2015. Non-oil exports to the Economic Community of West African States (ECOWAS) fell by a whopping 56 percent by end of last year, year-on-year.
“Our experience shows that most of these funds do not get to the intended beneficiaries. The conditions stipulated for accessing them are stringent. I will suggest commercial banks get more creative,” said Ken Osa-Oboh, CEO of Sureground Commodities.
Fatef Udoo Mavis, assistant director, development finance department of the CBN, said with the declining in non-oil export, it is imperative to improve exporters’ credit access and to support commercial banks lend more to create job and wealth.
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