Prof Ife urge Government to Implement manufacturing, Favourable policy guidelines, regulations and incentive regimes relating to non-oil export.

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Professor Ken Ife, a Development Consultant & Lead Consultant, Industry & Private Sector Development, ECOWAS Commission in his paper titled ‘Nigeria Economic Recovery and CBN RT 200 FX Programme: Role of Banks and Export Promotion Institutions’ presented through Virtual Zoom Conference during Bi-Monthly Forum, organised by Finance Correspondents Association Of Nigeria (FICAN) was held today February 18, 2022.

Prof said that IMPACT OF PERVASIVE INSECURITY AND FOREX ON PRICE STABILITY will greatly affect non-export supply chains negatively.

He highlights impact of CBN and the Bankers’ Committee “RT200 FX Programme”, which stands for the “Race to US$200 billion in FX Repatriation”. He throws more light saying The RT200 FX Programme is a set of policies, plans and programmes for non-oil exports that will enable us attain our lofty yet attainable goal of US$200 billion in FX repatriation, exclusively from non-oil exports, over the next 3-5 years.

He noted that the RT200 Programme will have the following five (5) key anchors:

-Value-Adding Exports Facility

-Non-Oil Commodities Expansion Facility

-Non-Oil FX Rebate Scheme

-Dedicated Non-Oil Export Terminal

-Biannual Non-Oil Export Summit

The Value-Adding Export Facility:

This will provide concessionary and long-term funding for businesspeople who are interested in expanding existing plants or building brand new ones for the sole purpose of adding significant value to our non-oil commodities before exporting same.

Nigeria today, we produce about 770,000 metric tonnes of Sesame, Cashew and Cocoa of which about 12,000 metric tonnes are consumed locally and 758,000 metric tonnes are exported. 16.8% of the 758,000 metric tonnes exported annually, is processed. The global chocolate industry is valued at about US$130 billion, but Cote D’Ivoire, Ghana and Nigeria that produce 72% of the global cocoa exports, only earn 5% (CDI-$3.6b; Ghana-$1.9b and Nigeria-$804m).

The Non-Oil Commodities Expansion Facility:

This will be a concessionary facility designed to significantly boost local production of exportable commodities, which may also serve as industrial raw material for export processing.

We would create a geographic prioritization of crops across the country to achieve production efficiencies and harness comparative advantages

Non-Oil FX Rebate Scheme:

This is a special local currency rebate scheme for non-oil exporters of semi finished and finished produce who show verifiable evidence of exports proceeds repatriation sold directly into the I & E window to boost liquidity in the market, similar to the Naira4Dollar Diaspora Remittance Scheme.

Dedicated Non-Oil Export Terminal:

In response to the chronic port congestion cited by exporters as a major impediment to trade facilitation, improved operations and foreign exchange earnings, we have designed a third anchor of the RT200 Programme, which is the construction/establishment of a Dedicated Non-Oil Export Terminal. According to the African Centre for Supply Chain Practitioners, Nigeria loses about US$14.2 billion annually due to congestion at our ports. Paraphrasing from an article by the Financial Times in December 2020, the congestion has become so bad that while it costs US$3,500 to ship a 40-feet container from China to Lagos, which is a distance of 22,000 kilometers, it costs US$4,000 to move the same container from the port to mainland Lagos, a distance of only 12 kilometres. According to WTO, Trade facilitation accounts for 10% to 15% of total trade volume, which in Nigeria’s case could be $10b to $15b for a total trade volume of $100b. Also while it costs less than $7,000 to export 100tons of cocoa from Ghana, it costs $35,000 to export the same 100tons of cocoa from Nigeria. Partnership is extended to State Govts that have access to sea to build dedicated export terminal. But the design must be ‘state of the art’ and with requisite quality infrastructure

Under this arrangement, loans to companies wishing to expand or build new plants that will generate verifiable export proceeds for the economy shall remain at 5 percent per annum for 10 years loans inclusive of 2 years moratorium.

Bi-annual Non-Oil Export Summit:

Prof noted that a more formal, predetermined and regular forum will be necessary to discuss the issues, challenges and opportunities in non-oil export, the first of which would be organized during the first week of April 2022. This Summit will bring together all the relevant stakeholders in the export business including bankers, customs officials, the Nigerian Ports Authority, the Nigerian Export Promotion Council, clearing agents, cargo airlines, shipping lines, logistics companies, insurance practitioners, etc, he added.

“We should suggest that the conference will be accompanied by trade and investment and exhibition of ‘made in Nigeria products.’ This gathering will be one where for every complain, problem, issue, challenge or difficulty that is presented or identified, there will be one or several agencies or practitioners that can articulate options for solving that problem. I believe that the ideas harnessed from such summits would be invaluable in helping us reach our ultimate goal of US$200 billion in non-oil exports per annum.

He pointed out that Netherlands was about US$120 billion last year in agric export. And yet, Netherlands has a land mass of about 42,000 square kilometres, which is much smaller that the land mass of Niger State alone, at over 76,000 square kilometres.

Prof was opinion that We need to develop training and capacity building programmes for Volunteers, Business Development Service Providers, Business Advisers within the PFIs on start-up training, business plan preparation; Business plan appraisal, Risk Assessment, Scoring and Assessment of programmes such as 100 for 100 PPP, RT 200 Programme. And that a pool of Business Advisers will improve the quality of Business Plans, reduce the rejection rates of applicants and the take-up of the loan facilities.

He said the Scoring and Assessment Framework should have ‘Constructive Feedback’ to enable applicants review and rework their projects and address the weaknesses. According to him, the Commercial and Development Banks should ideally have a Business Advisory Desk in each Branch, that should be the first port of call of prospective businesses seeking loan. The Business Adviser should be knowledgeable on various funding regimes and their eligibility criteria, he stressed.

Prof said the role of CBN to Strategic Lead with the Bankers Committee to provides low cost (5%), long term (10yrs) domestic Intervention funds, 2yr moratorium and enabling monetary policy environment and leverages with the fiscal authorities. Regulatory oversight, monitoring, supervision and programme evaluation of PFIs, he suggested.

MINISTRY OF FINANCE, BUDGET & NATIONAL PLANNING must ensure Fiscal incentives are in place to ensure sustained growth and development of the non-oil exporting companies. Even Monitor the production and exportation/importation through FIRS and Nigerian Customs Service, he added.

MINISTRY OF INDUSTRY, TRADE & INVESTMENT should implement manufacturing, trade promotion and investment policy guidelines, regulations and incentive regimes relating to non-oil export. FMITI will also engage domestic financial, development assistance and commercial sectors to stimulate growth in the non-oil export sector. “FMITI will ensure the alignment and coordination of the activities of all commerce and export related agencies such as Investment Promotion Council, SMEDAN, NEXIM Bank, Bank of Industry, Standard Organisation of Nigeria, NEPZA, Produce Inspectorates, Weight and Measures Dept etc.”

FEDERAL MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT (FMARD) should align their agriculture development, production and processing systems to non-oil export orientation. Also, co-ordinate the activity of the Agricultural Research and Development Agencies towards the development of improved feedstock seed varieties and modern farming practices. Formulate and implement appropriate policy guidelines, regulatory and incentive regimes to support the non-oil export produce.

FEDERAL MINISTRY OF SCIENCE, TECHNOLOGY AND INNOVATION should coordinate the engagement of appropriate technology in the development of non-oil export products and services, and ensure technology transfer.

While Federal Govt, through its relevant MDAs will provide support, trunk, arterial, hard, soft and quality infrastructure necessary including the provision of road, power, water etc to support non-oil export facilities. State Govts shall facilitate agricultural land procurement and the establishment of the actors, local govt and the communities and the Local Govt shall, in conjunction with State Govt, organise and support out-growers and other co-operative schemes for the host communities

TRADE INFRASTRUCTURE & LOGISTICS AGENCIES role as partners in developing and managing the non-oil ports (sea and Cargo, Inland Container Terminal, Depot, Bonded Warehouses, Export Pack Houses, Conditioning Centres, Cold Storage, Blast Chillers, Cold Chain Logistics etc)