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By Chinwendu Obienyi
The Central Bank of Nigeria (CBN)’s non-oil exports repatriation rebate scheme appears to be yielding fruits as investigations reveal that inflows into the Investors and Exporters Window (IEW) improved significantly over the last few weeks.
According to data obtained from the FMDQ’s website, total inflows to the IEW rose 62 percent month-on-month (m/m) to $1.84 billion in June as against $1.14 billion recorded in May 2022 – its highest level since December 2021 ($2.42 billion), albeit still significantly below Q1-20 monthly average ($3.68 billion).
In an effort to increase the country’s foreign reserves, the apex bank had launched a rebate scheme that targets to increase the nation’s reserves by $200 billion in FX earnings from non-oil proceeds over the next 5 years.
Under the new rebate scheme, the CBN also said it has committed to providing some financial incentives to Nigerian exporters of semi-finished and finished goods (manufactured in Nigeria), who sell their export proceeds at the IEW; or exporters of good and services (information technology & creative businesses) that are permissible under the export prohibition list.
The apex bank had disclosed that it plans to pay a rebate of N65 to exporters for every $1 of goods sold to third parties through the IEW window. It will also be recalled that the CBN Governor, Godwin Emefiele, had revealed that it paid over N3.5 billion as rebates to eligible non-oil exporters.
Reacting to the increase in inflows, analysts at Cordros Securities revealed that the improvement was primarily due to a 70.3 per cent m/m increase in inflows from local players (88.4 per cent of total inflows).
“Notably, we highlight that inflows from exporters (193.7 per cent m/m to $1.02 billion) rose to their highest level since the CBN created the IEW, reflecting the impact of the CBN’s rebate scheme in attracting non-oil exports”, they said.
According to them, inflows from foreign investors ($213.60 million vs May: $181.10 million) remain tepid relative to the pre-pandemic level (Q1-20 average: $1.28 billion), reflective of FX liquidity challenges and an overvalued currency.
“While we acknowledge the recent liquidity influx at the IEW, we expect inflows to remain below pre-pandemic levels over the short-to-medium term. Our prognosis is hinged on the limited inflows from the CBN in line with the little accretion to the gross FX reserves and tepid foreign inflows given the existing FX challenges. Accordingly, we expect the local currency to remain pressured in the near term”, they said.
Meanwhile, the nation’s currency (Naira) across the FX windows depreciated by 0.3 per cent week-on-week (w/w) to N426.13/$1 at the IEW and by 0.3 per cent to N617/$1 in the parallel market.
