The RT200 FX programme is a brilliant export growth initiative of the Central Bank of Nigeria (CBN). The goal is to grow the non-oil export proceeds repatriation from the current $5.5 billion per annum (as at 2021) to an average of $40 billion per annum leading to get generation of $200 billion in repatriation in the next 5 years (that is by 2027). To achieve this, two things have to happen and these include increasing the number of export businesses in Nigeria (which is the focus of this article) and supporting existing exporters to grow their export volume through funding and export market development (this will be addressed in the subsequent articles on this initiative).
As at 2016, the number of businesses doing documented export in Nigeria is about 800 in number and this has almost doubled with the number increasing to about 1,500 businesses in 2021. This has been largely driven by the scarcity of foreign exchange which is making many businesses, particularly importers, to begin to consider the generation of foreign exchange through exportations. To be able to achieve the objectives of the RT200 FX of the CBN, there is the need to increase the number of exporters in Nigeria from the current level of about 1,500 companies to at least 10,000 companies within the next one 1-2years.
It is important to state that this is very possible because import businesses alone are more than 40,000 and majority of them are in dire need of foreign exchange to fund their import transactions. So one of the viable strategy to be considered in growing the number of exporters in Nigeria is to convert these importers (that are hungry for foreign exchange) to exporters. Another way to grow number of exporters in order to achieve the RT200 FX is to encourage and support manufacturers and Agro processors in the country to begin to look beyond the local market and begin to consider the export market.
The reason why the number of exporters need to increase is to reduce the average export volume that individual companies need to do per annum in order to achieve the average of $40 billion required per annum to achieve the RT200 FX in 5 years. Currently, the average non-oil-export volume done per business in Nigeria as at 2021 is about $3.64 million. This figure is as high as $14million for large scale exporters (large scale exporters are those exporting more than a million dollars per annum), and about $700,000 for medium scale exporters (medium scale exporters are those exporting a total of between $500,000 and $999,000 per annum). The average of non-oil export volume per company is about $216,000 for small scale exporters (small scale exporters are those exporting a total of between $100,000 and $500,000 per annum) and less than $100,000 for micro scale exporters (micro scale exporters are those exporting a total of less than $100,000 per annum).
At the current level of 1,500 exporters, the country will need each company to export an average of about $26.6 million per annum to achieve $40 billion per annum and hence $200 billion in 5 years. By increasing the number of exporters from the current level of about 1,500 companies to 10,000 companies, the country will only need each exporter to export an average of about $4 million per annum (which is very close to the current average) in order to achieve $40 billion per annum and hence $200 billion in 5 years. Through the implementation of this strategy, the country stands a chance to see the impact of the CBN RT200 FX programme becomes a reality in the foreign reserves.
In order to be able to implement this recommended strategy of growing the number of exporters in Nigeria to achieve the goal of RT200 FX programme, there is the need to have a very viable export desk. Currently, most banks in the country do not have a market distinct facing export desk and those that have it are unable to achieve the desired result of growing export volume because the desks are not properly set up to succeed. This is because they lack the right structure, right systems, right staffing, right strategies and right services needed to make the desk become viable. The details of setting up a viable export desk will be the focus of my next article on the RT200 FX programme.
Finally, I will like to reiterate that the CBN RT200 FX is a fantastic opportunity to grow the non-oil export volume in Nigeria. However to achieve this goal, there is the need to grow the number of exporters in Nigeria. The low hanging fruits to be explored in growing the non-oil export is the conversion of importers that needs foreign exchange to exporters. The banks are the strategic partner of the CBN that can implement this strategy and grow the number of exporters in Nigeria because of the relationships they have with almost every business in the country including the importers. To do this, the banks need rethink their strategy (and I must say that many of them do not have a strategy because of lack of capacity) and also rethink the way they currently set up and run their export desks.
For the Love of Nigeria, Africa and Mankind
Bamidele Ayemibo (bayemibo@3timpex.com)
Lead Consultant, 3T Impex Trade Academy
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