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| CBN Governor, Godwin Emefiele |
The flow of more capital into the manufacturing sector will achieve two significant goals.
First is to reduce Nigeria’s import bill, which stood at N3.66 trillion (or $8.9 billion) in the first to third quarters of last year.
The export bill more than doubled $4.29 billion total import bill in 2020.
The next will be to enable the country earn more foreign exchange to lift foreign reserves and the naira.
These two goals are at the centre of Central Bank of Nigeria’s (CBN’s) renewed commitment to funding the real sector, especially the manufacturing sector.
New policies have been instituted to make the plan a reality, including more funding, and guidance provided by the regulator.
In the funding side, the CBN recently announced N166.6 billion disbursement to manufacturers under the Real Sector Support Facility (RSSF).
CBN Governor, Godwin Emefiele also provided guidance to manufacturers when he advised manufacturers against taking dollar loans where their revenue is in naira.
He spoke during a tour of Tolaram Group projects and Lagos Sea Port under construction. Tolaram Group manages the Lagos Free Trade Zone.
Emefiele said the apex bank will continue to provide naira funding, and advise that where the revenue stream is in naira, dollar loans should be avoided.
“So, for any entrepreneur that wishes to do business in Nigeria, we will provide naira funding and will always advise that particularly if your revenue stream is in naira, such company should avoid taking dollar loans. Take cheap naira loans at single digit interest rate with two years’ moratorium,” he said.
He said the CBN will continually encourage people to take advantage of of such loans to drive industrialisation in Nigeria and get a manufacturing business back alive again.
He said the CBN has provided N100 billion intervention fund to Tolaram Group under the Differentiated -Cash Reserve Ratio or through the Commercial Agriculture Credit Guarantee Scheme, which represents only 10 per cent of the N1 trillion, which is about $2 billion, project embarked by the company.
“You can see, we have sown a seed and we have also given support through making foreign exchange available for them to bring in the equipment to get the Lagos Port operation to work well,” he said.
Group Managing Director, Tolaram Group, Haresh Aswani, said the CBN continually supports its operations.
He said his company will do more in supporting the economy through forex generation and export of locally produced commodities.
Tackling rising import bill
To check the continuing pressure from relentless imports, the apex bank inaugurated the ‘100 for 100’ Policy for Production and Productivity (PPP). This allows manufacturers easy access to forex to stimulate investments in priority sectors, boost production, expand export and earn forex.
Under this initiative, every 100 days, manufacturers in critical sectors that seek to engage in greenfield projects or in expanding their existing facilities are given access to cheaper forms of credit at single digit rates, as well as forex to procure plants and machineries.
The CBN has, through seven banks, disbursed the first tranche of N23 billion to 28 manufacturers, agriculture and health care operators.
Tracking the real sector funds
In the apex bank’s for real sector support report, Emefiele provided a breakdown of the intervention funds disbursements meant to catalyse production and productivity in the economy.
These interventions include the Real Sector Facility (RSF), Real Sector Support Facility (RSSF), Anchor Borrowers’ Programme (ABP), Commercial Agriculture Credit Scheme (CACS), Non-Oil Export Stimulation Facility (NESF), and Textile Sector Intervention Facility (TSIF).
“Specifically, these programmes and schemes have continued to receive resounding commendations, as they have proven to be effective in expanding credit and stimulating investments in the real sector,” Emefiele said.
Emefiele said with significant opportunities in the real sector, there remains sufficient room for additional investments in the various sub-sectors.
He called on potential investors to take advantage of the various intervention programmes and schemes, as well as other financing options to invest in key sectors of the economy given the potential gains that could be generated from them.
Emefiele assured the prospective investors that the apex bank would continue to provide the needed support, financial and otherwise, to fast-track the development of the industrial and agricultural sectors of the economy.
Banks support funds disbursement programme
The CBN’s list of seven commercial banks involved in the first batch of ‘’100 for 100 Policy for Production and Productivity (PPP)’’ initiative showed the lenders disbursed N23.2 billion loans to 28 manufacturers, agriculture and healthcare providers in the maiden phase of the project.
The 100 for 100 PPP – Policy on Production and Productivity”, is anchored in CBN’s Development Finance Department under Emefiele’s direct supervision.
The PPP financial instrument is expected to reverse Nigeria’s over-reliance in imports by strengthening domestic production of imported products.
In a report posted on the CBN’s website, the apex bank named Zenith Bank, Fidelity Bank, Stanbic IBTC Bank, Wema Bank, FCMB, Union Bank and Keystone Bank as handlers of the first beneficiaries of the PPP initiative.
The list showed that Zenith Bank disbursed a total of N9.2 billion to 11 companies cut across manufacturing, agriculture and healthcare.
The list showed that N2 billion was loaned to Sarsoli Limited, a Lagos-based company for the purchase of calcium-carbonate, filler and black master batches. Another N1.2 billion went to J.O.F Nigeria Limited, for the completion of salt factory in Lagos, among others.
Fidelity Bank disbursed a total of N5.7 billion to four companies in the manufacturing and healthcare sectors.The bank loaned N2 billion to Diamond Super Sacks Limited for the acquisition of woven sacks, and polytwines making machine for its Kano-based company.
Mecure Company, a Lagos-based healthcare company, also secured N1.5 billion loan for the purchase of equipment for Onchology Centre while Juddy Bolema Industries Limited got N1.3 billion for the expansion of existing factory and purchase of plant and machinery for the recycling of plastic waste.
Also, Stanbic IBTC Bank disbursed a total of N3.32 billion to four companies manufacturing and agriculture sectors. The bank disbursed N1.9 billion to Lanre Shittu Motors, for the expansion of phase 2 of local automobile assembling plant in Federal Capital Territory (FCT).The bank also disbursed N1 billion to Wewood Limited to finance 100 per cent cost of warehouse in Edo State, among others.
First City Monument Bank (FCMB) disbursed N1.1 billion to three companies involved in manufacturing and agriculture; Wema Bank disbursed N450 million to Food Solutions Livestock Limited for the expansion of poultry farming operations in Oyo State.
While Union Bank disbursed N2.3 billion to three companies in agriculture and manufacturing, Keystone Bank disbursed N998 million to Lamb Ranches Limited for the acquisition of farm input for cattle breeding in Rivers State.
Banks back $200b five-year FX earnings plan
Commercial banks are adjusting their business plans to include supporting the CBN to achieve $200 billion forex earnings target in three to five years.
Emefiele said the real sector operators will be required to generate export proceeds needed to fund their imports by the end of this year to save forex for critical needs.
This falls within the “RT200 FX Programme”, which stands for the “Race to $200 billion in FX Repatriation” policy.
The RT200 FX Programme is a set of policies, plans and programmes for non-oil exports that will enable Nigeria attain its lofty yet attainable goal of $200 billion in FX repatriation, exclusively from non-oil exports, over the next three to five years.
He said the RT200 FX Programme is one of the strategies that can help Nigeria earn more stable and sustainable inflows of foreign exchange.
Emefiele said the RT200 Programme implementation will be supported by 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 billed for next month.
He explained that RT200 Programme is not intended to be a silver bullet to all our problems in the export segment of the economy.
“Rather it is a first step to ensure that the CBN is better able to carry out its mandate in an effective and efficient manner, which guarantees preservation of our scarce commonwealth, and the stability of our national currency, the Naira. It is only by boosting productive and earning capacity of this economy that we can truly preserve the long-term value of our currency, as well as the stability of our exchange rate”.
Emefiele added that the Value-Adding Export Facility will provide concessionary and long-term funding for business people who are interested in expanding plants or building brand new ones for the sole purpose of adding significant value to our non-oil commodities before exporting same.
“the Value-Adding Export Facility is a first step to getting back some of these foreign exchange that we rightly deserve,” he disclosed.
He said the Non-Oil Commodities Expansion Facility will also be a concessionary facility designed to significantly boost local production of exportable commodities.
Continuing, he said the Non-Oil FX Rebate Scheme 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 Investors & Exporters window to boost liquidity in the market.
Emefiele said by year-end, the apex bank is likely to tie the volume of export proceeds generated by bank customers to dollar allocations, adding that banks could only get 10 per cent of such export proceeds depending on how best their customers remitted export proceeds.
Emefiele also said the apex bank will be working with state governments with interest in building air and sea ports terminals to support export of goods to earn dollars for the economy.
He said these policy plan is to support growth by taking unprecedented measures to prevent the economy from going into a tailspin.
“Our first objective was to restore stability to the economy by providing assistance to individual households, SMEs and businesses that had been severely affected by the pandemic, as well as by the lockdown measures,” he said.
According to Emefiele, working with banks and participating financial institutions, the CBN has granted over N3 trillion in intervention loans that have undoubtedly been one of the critical ingredients for our economic recovery and employment generation.
He said the CBN would be reviewing intervention programmes going forward to ensure that they continue to achieve the desired results.
Fidelity Bank, Access Bank, Zenith Bank and United Bank for Africa have all reaffirmed their commitment to actively support the CBN efforts to achieve its goal of $200 billion forex repatriation target.
Executive Director, Northern Businesses, Fidelity Bank Plc, Hassan Imam, said banks would continue to take steps to bridge the knowledge gap in the non-oil sector space by facilitating the necessary processes and documentation for the new policy, with the goal of increasing FX repatriation through exportation.
He reiterated his bank’s readiness to support government’s economic imperatives to boost revenue in non-oil sector of the economy.
“As you know Nigeria is an import-dependent economy with so much pressure on our currency and the source of revenue as a nation is petrol dollar. So, the initiative of the CBN is to leverage our non-oil products especially in agriculture like hibiscus flower, cashew nut sesame and many other products for exports,” he added.