CBN to stop the sale of foreign exchange to banks by end of 2022

CBN to stop the sale of foreign exchange to banks by end of 2022

The Central Bank of Nigeria (CBN) has announced that it will stop selling foreign currency to Deposit Money Banks (DMBs) by the end of the year. This comes just months after the CBN Governor and AbokiFX brawl.

This is because the apex bank has stated that banks must begin to get their FX from export revenues, necessitating the need to support the economy's non-oil sector.

The CBN Governor, Godwin Emefiele, disclosed this during a special press briefing held at the end of the 364th Bankers Committee meeting on the introduction of the bank's new forex repatriation plan, the 'RT200 FX Programme,' on Thursday, February 10, 2022, at its Abuja headquarters.

The RT200 FX Program, which stands for "Race to US$200 billion in FX Repatriation," is a combination of non-oil export policies, strategies, and programs that will enable Nigeria to achieve a lofty but doable objective of US$200 billion in FX repatriation, entirely from non-oil exports, over the next 3-5 years.

The move, according to Emefiele, is in accordance with the apex bank's new pledge to grow the country's foreign reserves through non-oil export revenues.

Implications of this move

-          The CBN will grant concessionary and long-term loans to businesses interested in expanding existing plants or developing new ones for the express aim of adding significant value to non-oil commodities before exporting them under the RT200 FX initiative, which will go into effect immediately. The term of these loans will be ten years, with a two-year moratorium and a 5% interest rate.

-          During the briefing, the CBN boss stated that the newly implemented program will have five main 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.

-          The bank has put a halt to the issuing of new money changer licenses across the country. Bureau de change operators has long been a prominent black market, giving exchange rate assistance to those who are unable to obtain foreign currencies from the CBN in an official manner. The restriction of their capacity to obtain foreign money from the CBN has had a substantial impact on the country's economy, putting further pressure on the naira. Following the naira's sharp depreciation against the US dollar and other major international currencies, the Buhari administration has been chastised for mismanaging the country's economy. When the administration took office in 2015, a dollar was worth around 180 naira; presently, it's worth around 411.50 naira, and about 510 naira on parallel markets.