Dr. Muda Yusuf is the director-general of the Lagos Chamber of Commerce and Industry (LCCI). In this interview with ZAKA KHALIQ, he calls on the Central Bank of Nigeria (CBN) to review the repatriation of export proceeds policy to allow local manufacturers to thrive.
Don’t you think there is a need to review the repatriation of export proceeds policy?
There is a need for the apex bank to rethink or re-evaluate its foreign exchange policy on the repatriation of export proceeds so as to drive non-oil exports. The Central Bank of Nigeria’s (CBN)’s policy on repatriation of export proceeds results in sharp practices and corruption in export documentation processes, with many exporters avoiding filling the Nigerian Export Proceeds Form (NXP), otherwise known as ‘Form NXP’.
One of the problems hindering non-oil export is CBN’s policy that disallows exporters from having free and unfettered access to their export proceeds. You get your export proceeds and the CBN will be telling you that this is the exchange rate that they will need to convert your proceeds for you. It’s not fair. You are the owner of your money; you are the one that exported. If they cannot give you your dollar directly, then they should allow you to negotiate the rate at which you sell the dollar rather than impose conversion rates on you.
The CBN has a policy that requires exporters to repatriate theirs and the policy has been in operation since the deregulation of the foreign exchange market in 1986. The CBN only dust-up the policy through an embargo on access to foreign exchange on exporters who fail to repatriate their proceeds whenever there is a foreign exchange crunch.
The CBN requires exporters to repatriate export proceeds within 90 days for oil and gas and 180 days for non-oil exports. Failure to do so constitutes a breach of the extant regulation. This is partly to stem capital flight through exports.
But the policy, which came in the wake of the shortage of foreign exchange in the country, forcing the apex bank to place its hopes on the remittance of export proceeds and Diaspora remittances, has not gone down well with exporters, particular the rate at which the exporters exchange their proceeds. The current policy now is that once export proceeds comes, it has to be exchanged at the Investors’ and Exporters’ (I&E) window, which is about N410/$ or thereabout, while the open market rate is about N480/$.
Look at the difference and we said we want to encourage; non-oil export? Is that not a deliberate disincentive? not as if there is any major support to exporters who also go through many constraints to bring in their proceeds and the CBN now imposes a rate on them?
ven though you cannot give money to exporters to develop, just let them have access to their money. If they want to cash it, let them cash it; let them take it to bureau de change operators or whatever. Isn’t it still in this economy? The exporters would have gotten good value for their money.
So, what is your advice on this issue?
We hope that the apex bank will have a rethink because when you say people are not bringing back their proceeds, it’s partly because of this problem.
There has been a lot of energy that is dissipated chasing exporters that are not remitting their export proceeds.
There is what we call the NXP Form. When you are exporting, you have to fill the form so that when you are bringing the proceeds, it would have been documented that you have exported. But many of them (exporters) were avoiding filling the ‘Form NXP,’ because there is a lot of intimidation whereas the simple solution should have been filling the form; when your proceeds come, you have free access to them. But because people don’t want to be short-changed, they don’t want to declare their exports.
For instance, some exporters decided to go to neighboring countries such as the Republic of Benin (Cotonou) and export from there. Crossing the borders to export because of policies meant the Nigerian economy was losing, whereas, if they move it through our own ports, at least, those who are carrying the loads or off-loading the containers will benefit from it.
There is a positive relationship between Gross Domestic Product (GDP) performance and export performance. If you see an economy that is making progress, go and check its export data. But regrettably, if you look at our export basket today in terms of value, oil & gas is accounting for almost 95 percent.
It’s about creating an environment that will make our export competitive. Part of the things that have been seen even in the nation’s limited export is the crowding out of indigenous players. We should have a deliberate policy to ensure that we mainstream indigenous players in all sectors. Even the non-oil export we are talking about, almost 80% of it has been taken over by Asians. Go and check with exporters, the main thing Nigerians are doing now maybe is just logistics, to help exporters carry and offload goods.
