Fakoyejo OlalekanThe World Bank said the ‘Race to US$200 Billion In FX Repatriation (RT200 FX)’ Programme of the Central Bank of Nigeria (CBN) has worsened Nigeria’s foreign exchange (forex/FX) problem.
Recall that the central bank created the RT200 FX Programme to raise $200 billion in Foreign Exchange earnings from Non-Oil proceeds over the next 3-5 years.
It has a rebate scheme designed to incentivise exporters in Non-Oil export sector to encourage repatriation and sale of export proceeds into the forex market rather than go through the black market after acquiring forex in the official market, which will resolve the forex shortages.
In its ‘Nigeria Development Update (December 2022): Nigeria’s Choice.’ report, the World Bank said the RT200 FX Programme will lead beneficiaries of the programme to take their forex to the black market due to the premium gains that can’t be found in the Investors & Exporters window of the official market.
Prime Business Africa had reported that the dollar rate in the black market is more than N200 above the rate in the official market, where the dollar is exchanged at N456.50/$1 as of December 23, 2022, compared to about N745/$1 in the parallel market.
The World Bank said, “The CBN introduced the “Race to $200bn in FX Repatriation (RT-200)” programme in February 2022, with the goal of repatriating $200bn of non-oil export earnings over the next five years.
“The main component of this programme is a rebate scheme to encourage the repatriation and sale of export proceeds into the FX market.
“Despite the good intentions of this scheme, it has, in practice, created an additional FX window with a different (subsidised) exchange rate, even if transactions are executed through the I&E window.
“Moreover, with the rising parallel-to-official rate premium, incentives are created for agents to settle transactions outside of the I&E window at the parallel rate even after benefiting from the RT-200 rebate. This policy should be reconsidered.”
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