The Central Bank of Nigeria (CBN) has announced that raw produce exporters will no longer be eligible for foreign exchange (forex) rebates.
This was disclosed by the CBN Governor, Godwin Emefiele, at the end of the Bankers’ Committee meeting.
Instead of offering rebates to portfolio investors, the bank announced intentions to provide loans to farmers who want to expand their plantations. The CBN Governor said granting forex rebates to exporters of raw produce “has the capacity of creating inflation”.
What the CBN is saying about FX rebate
Emphasising his position on the matter, Emefiele stated that “because they see there’s going to be a rebate everybody runs to the bush to buy cocoa at inflated prices, we don’t want that”.
The CBN said its doors remain open to operators in the agriculture downstream sector “to come and take loans and say you want to expand your cocoa plantation, you want to expand your sesame plantation, you want to expand your cashew plantation and others.”
Exporters of raw agricultural produce he said “will get the loan but that rebate we may not be able to look at that”. He added, “For now the CBN is interested in looking at how it is going to make Forex available for businesses into semi-processed, processed and wholly finished products.”
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Emefiele stated that manufacturers seeking to import machinery would have all the FX they need.
“If you want to import your plant and machinery we will give you all the Foreign exchange you need to import the plant because we know that when we give the foreign exchange to import the plant it is probably going to be like one-off and after that, we will now begin to generate that same FX that we use in importing. We will generate exponential funding for that FX to fund other peoples obligation.”
Entrepreneurs can now go to a bank and get a loan at 5% through any of the bank’s actions, according to Emefiele.
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“That will certainly reduce the cost of production and when I produce or process this product as it were and I conduct export and I sell my export proceeds into the market, I will get an FX rebate naira for dollar that will encourage me to do more and do more.”