Central Bank of Nigeria , Stakeholders Harp On N500bn Non-oil Intervention Fund


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With its determination to boost the nation’s economy through diversification, the Central Bank of Nigeria (CBN) has mapped out plans to revive moribund firms in the non-oil export business through its N500 billion export stimulation facility.
The apex bank has realised the non-oil sector insignificant contribution to Nigeria’s Gross Domestic Product (GDP), and has shown desire to support President Muhammadu Buhari-led administration in diversifying the economy away from oil & gas sector.
Since the drop in global oil prices, the CBN and federal government had been thinking of various resources to raise its non-oil income so as to be able to withstand shocks, create jobs and stabilise the foreign exchange market.
Data from the National Bureau of Statistics (NBS) on Foreign Trade in Goods Statistics revealed that Crude oil exports continued to grow faster than non-crude oil exports this year.
The NBS report stated that export trade is still dominated by crude oil exports, which contributed N2.9 trillion or 83.17 per cent to the value of total exports in third quarter of 2017.
“Non-oil products only contributed to 3.54 per cent of total exports in the quarter,” the Bureau had reported.
In the sector contribution to GDP, the bureau explained that non-oil sector grew by negative 0.78 per cent in real terms in third quarter of 2017, lower by negative 0.79 per cent compared to the rate recorded same quarter of 2016 and negative 1.20 per cent point lower than second quarter of 2017.
The Agriculture (crop) has been the major driver in non-oil sector contribution to GDP and CBN is targeting cocoa produce, but the funding would pass through the apex bank to the commercial banks or through Nigeria Export-Import Bank (NEXIM), and goes through the exporters to the primary farmers.
Also, cash crops like rubber, can earn foreign exchange to lubricate and run the economy as demands from European countries and Asia has significantly increased.
For instance; a technically specified natural rubber valued at N922.87 million was exported to Spain, N554.94 to Netherlands, N527.41 million to France, N477.83 million to South Africa and N472.60 million to Italy.
There has been increased demand of cocoa shells, husks, skins and other cocoa waste from Germany, Spain, China, Malaysia and Netherlands.
Emefiele had maintained,  “ to many cocoa farmers, primary rubber producers or palm oil producers who are in the villages or in the communities, we are saying that we are going to develop a framework that would make finance available to them through NEXIM and through the framework to be set up, where they can access some intervention funds”.
The CBN Governor also disclosed plan to set up an Anchor Borrowers’ Programme (ABP) for non-oil exporters.
“So, we are saying that the source of revenue into the country should not just be oil, neither should it just be foreign portfolio investments or foreign direct investment alone,” he stated.
Eyes Of Lagos gathered that, the President, Manufacturing Association of Nigeria (MAN), Dr. Frank Jacobs commended the CBN for its motivation to revive the moribund manufacturing companies in the country.
He hinted that the association was ready to work with CBN in identifying those challenges and implement its polices on non-oil export sector growth.
According to him, “To revive the moribund manufacturing sector is a welcome idea by the CBN governor since those were the things we have been expecting. There are several strategic companies that are moribund across the country.
“For CBN to acknowledge this is a welcome development.  It is our hope that CBN would have to carry MAN along. We can point to them those strategic moribund companies that have needed to be revived,” he said during the weekend.
Emefiele this year has maintained its position interest rate and expectations are high over possible reduction by 2018.
Also supporting the comment of MAN president, the President, Abuja Chambers of Commerce and Industry, Prince Adetokunbo Kayode, welcomed the CBN plans to revive the manufacturing sector, lamenting over the challenges of funding.
He said, “Pumping of these funds to the commercial banks will not work. Commercial banks are obstruction to manufacturing development. Commercial banks are looking for short-term funds and not interested in long-term funds which the manufacturing sector is not used to.
“CBN needs to work on its lending mechanism via lending directly to those manufacturing sector. Before CBN pushes out the funds, they need to sit down with the appropriate stakeholders and deliberate.
“The CBN must consider finance leasing to those in the manufacturing sector and agriculture. The real growth in any economy is Agriculture and Small and Medium Enterprises (SMEs)”.
Before now, the CBN had issued a guideline on non-oil Export Stimulation Facility (ESF), established to support the diversification of the economy away from oil & Gas sector and to expedite the growth and development of the non-oil export sector.
According to the guidelines for operating the fund, the CBN is expected to invest in a N500 billion debenture to be issued by NEXIM in line with section 31 of CBN Act.
Objectives of the facility include to improve access of exporters to concessionary finance to expand and diversify the non-oil export baskets; attract new investments and encourage re-investments in value-added non-oil exports production & non-traditional exports and shore up non-oil export sector productivity and create more jobs.
Others are to support export-oriented companies to upscale and expand their export operations as well as capabilities; and broaden the scope of export financing instruments.
The guideline stated that eligible transactions of the ESF include Export of goods processed or manufactured in Nigeria; Export of commodities and services, which are allowed under the laws of Nigeria; Imports of plant & machinery, spare parts and packaging materials, required for export-oriented production that cannot be sourced locally, among others.
The guidelines by CBN further stated that the facility was essentially designed to redress the declining export credit and reposition the sector to increase its contribution to revenue generation and economic development.
“It will improve export financing, increase access of exporters to low interest credit and offer additional opportunities for them to upscale and expand their businesses in addition to improving their competiveness.
“It shall be responsible for the day-to-day administration of the Facility and rendition of periodic reports on the performance of ESF to CBN.
“Facilities with a tenor of up to three years would be granted at a maximum all-in interest rate of seven and half per cent (7.5 per cent) per annum; Facilities with tenor of over three years, would be granted at a maximum all-in interest rate of nine percent per annum.
Furthermore, the guideline stated that the facility shall not exceed 70 percent of the total cost of the project or transaction subject to a maximum of N5 billion.
“The ESF shall have a tenor of up to 10 years and shall not exceed the 28th of December, 2025. Stocking facility shall be for a maximum tenor of one year with the option of roll-over not exceeding twice. However, this shall attract an additional fee of 0.25 per cent per annum of the loan amount and is subject to approval of CBN. Working capital facility shall be for a maximum tenor of one year with the provision of roll-over not exceeding twice. However, this shall attract an additional fee of 0.25 per cent per annum of the loan amount and is subject to approval of CBN.
According to the CBN, the beneficiary shall utilize the funds for the purpose for which it was granted; Adhere strictly to the terms and conditions of the loan and comply with all relevant laws and regulations; Provide periodic reports on the status of the project in prescribed format as well as periodic financial statements in line with extant company registration regulations and repay maturing loan obligations in line with approved repayment schedule, among others.
Director General, Lagos Chamber Of Commerce and Industry (LCCI), Mr. Muda Yusuf, said “The N500billion intervention is a welcome development. We commend the CBN for the move but access to the funds should be facilitated.
“It is one thing to have the N500 billion fund, it is another thing to have access to it. The way to have access to it is by CBN easing its conditions. If the CBN will have to put in place a credit guaranty scheme, or credit insurance scheme, that will be a welcome development so that the risk of lending to manufacturing sector by the commercial banks will reduce.
“Generally, commercial banks perceive that the manufacturing sector is a risk sector because of the harsh operating environment which can affect their sustainability.  We have had experience in the past where we have the funds and it could not be accessed. It has happened in the SMEs, Manufacturing and Agriculture. So, the bottleneck to access must be addressed by the CBN.”

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