The Central Bank of Nigeria (CBN) has announced an expansion of its non-oil export rebate scheme to include more sectors, aiming to increase dollar inflows in the face of declining oil production.
The updated scheme will provide naira incentives to exporters of primary goods or raw materials that repatriate dollars, encouraging them to export more.
According to a CBN statement, the new scheme, effective retroactively from April 1, 2023, amends the initial scheme introduced last year, which applied only to exporters of finished and semi-finished goods.
Under the revised scheme, raw material exporters will receive N25 per dollar of repatriated export earnings, while processed item exporters will get N65 per dollar.
CBN Governor Godwin Emefiele recently highlighted the progress of the export rebate regime under the ‘Race to $200 billion (RT 200)’ program.
Data reveals that repatriation due to the program increased by 40% from $3.0 billion in 2021 to $5.6 billion by the end of 2022.
In 2022, the CBN collaborated with commercial banks to incentivize exporters to repatriate their earnings, countering declining dollar inflows caused by low oil production and foreign investors avoiding the country’s restrictions on dollar outflows and multiple exchange rates.
Export Incentive Expansion: A Necessity for Nigeria’s Economy
The Central Bank of Nigeria’s decision to expand its non-oil export rebate scheme is a much-needed move for its economy.
With oil production dwindling and foreign investors shying away from Nigeria’s restrictive dollar outflow policies and multiple exchange rates, the nation must find alternative sources of foreign exchange.
The expanded scheme, which now includes exporters of primary goods and raw materials, has the potential to increase exports and, consequently, dollar inflows.
This is a proactive measure to diversify the economy and reduce reliance on oil revenues.
However, merely expanding the export rebate scheme is not enough.
The government and CBN must also address other challenges the export sectors face, such as inadequate infrastructure, lack of access to affordable credit, and bureaucratic bottlenecks.
Addressing these issues will enable a more conducive environment for exporters to thrive, ultimately boosting the nation’s economy.
The government must support and invest in non-oil sectors, especially agriculture and solid minerals, to facilitate export growth.
By doing so, Nigeria can build a more resilient and diversified economy less susceptible to the oil market’s volatility.
Did you know?
- Nigeria is the largest economy in Africa, with a GDP of $514 billion in 2021.
- The non-oil sector contributed about 91% to Nigeria’s GDP in 2021, while the oil sector contributed around 9%.
- Agriculture is the largest non-oil sector in Nigeria, accounting for about 23% of the country’s GDP.
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