Fakoyejo OlalekanGuaranty Trust Bank (GTBank), United Bank for Africa (UBA), First Bank, and other Nigerian lenders have agreed to loan N500 billion to export-oriented companies.
According to the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, the banks resolved on borrowing export-oriented companies to boost the volume of export repatriations.
Emefiele revealed during the 13th annual Bankers Committee Retreat, held in Lagos over the weekend, that big banks will have to take a bigger share of the N500 billion which will be loaned out yearly.
Why the loan to exporters is important
This will increase the inflow of foreign exchange (forex) into the country through non-oil exports, as forex scarcity hit the country’s international reserves.
Nigeria’s foreign reserves was $40.520 billion as of December 31, 2021, but as of November 15, 2022, the international reserves fell to $37.17 billion, as the central bank continues to deep into it to defend the naira against the dollar.
With oil revenue on the decline and barely contributing to the foreign reserves, the banks are looking to increase revenue from non-oil export to raise foreign currency repatriation.
Two weeks ago, Emefiele disclosed that a total sum of $4.99 billion was repatriated from non-oil exporters since the ‘Road to $200 billion non-oil exports revenue programme (RT 200)’ was introduced in February 2022.
Note that the ‘RT 200’ is a CBN initiative that aims to raise $200 billion in forex earnings from non-oil proceeds in three to five years.
How the N500 billion loan will help exporters
Emefiele said the N500 billion loan will help in providing necessities, such as equipment, needed to make Nigerian products exportable, adding that the credit will generate measurable export receipts
“The retreat also agreed that in an attempt to boost the volume of export repatriations, there is a need to continue to support our exporters who may need facilities either to bring in equipment with which they can process their goods and make them high standard that can qualify for export abroad and earn higher value.
“So the Bankers Committee decided that every year and it should be measurable, the entire banking industry must grant at least a minimum of N500 billion in loans to export-oriented companies that will generate measurable export receipts, non-oil export proceeds that will complement what the CBN is doing.
“The CBN will come up with modalities where it will insist that bank A should grant a minimum of X amount in export loans and naturally the big banks will have to take a bigger share of this pie. But we also see that the big banks have made tremendous progress and contribution towards the repatriation that we have seen so far on RT 200.
“This is intended to further stimulate export financing and also encourage export of goods out of the country. So you can generate export proceeds in an exponential way. Eventually export proceeds from the non-oil sources will be high to the point where after some time it relieves the CBN of the pressure that goes to finding dollars to meet the import needs of both the banks and their customers,” the CBN governor said.
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