CBN ends forex sales to banks

The Central Bank of Nigeria (CBN) has announced plans to stop selling foreign currency (forex) – US dollar, euro, pound sterling, among others – to banks.

The apex bank had put Deposit Money Banks (DMBs) on notice that it will stop selling forex to them by the end of 2022.

While announcing the introduction of what it called The RT200 Programme, the CBN said it was ripe for the banks to source for their forex by funding entrepreneurs with ideas, skills and support to make them responsive and attract foreign currencies to Nigeria.

This was disclosed by CBN Governor Godwin Emefiele at the Bankers’ Committee press briefing on Thursday.

Experts said the new policy by the CBN if properly handled, would reduce pressure on the naira, increase productivity, expand exports, attract foreign exchange to the country and create job opportunities for the people.

The experts said there was no shortcut to foreign direct investment, recalling that they had earlier told the government that stopping disbursement of forex to bureau de change operators alone will not save the naira and that the way to resolve the problem must be all-encompassing, including holding banks to account.

What the new intervention entails

CBN said The RT200 Programme will have the following five key anchors: Value-Adding Exports Facility, Non-Oil Commodities Expansion Facility, Non-Oil FX Rebate Scheme, Dedicated Non-Oil Export Terminal and Biannual Non-Oil Export Summit.

Emefiele, in his speech, said “After careful consideration of the available options and wide consultation with the banking community, the CBN is, effective immediately, announcing the Bankers’ Committee “RT200 FX Programme”, which stands for the “Race to US$200 billion in FX Repatriation.”

The CBN governor said the new policy was directed at the non-oil export sector.

“The RT200 FX Programme is a set of policies, plans and programmes for non-oil exports that will enable us to 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 said.

The apex bank boss noted that the country could not continue to depend on FX earnings to fund its import from a product it could not determine in both price and quantity.

Emefiele further disclosed that the CBN would be reviewing its intervention programmes going forward to ensure that they continue to achieve the desired results.

“Although interest rates on our various intervention facilities were expected to revert to 9 per cent effective March 1, 2022, we are announcing that the rates would remain at 5 per cent for another year in view of the promising trajectory we have established in economic growth and job creation.

“In effect, the concessionary interest rate of five per cent on our intervention facilities would now be extended until March 1, 2023,” he said.

Why banks must generate their forex

The CBN governor said the commercial banks do not have a choice but to begin to…