Naira defense: CBN’s scrapped “RT 200, Naira4Dollar” gulp N155bn
Economic experts have reacted to the Central Bank of Nigeria (CBN)’s spentding of over N155.5 billion on the now abolished RT200 and Naira4Dollar scheme in 2022 in a bid to boost foreign exchange (FX) inflows.
According to data obtained from the apex bank’s recently published annual report for 2022, the amounts were classified as rebate expenses” connected to the now scrapped RT 200 and Naira4Dollar, a policy under CBN which many believe was part of the reasons that led to the suspension of governor, Godwin Emefiele.
The bank stated it incurred N137 billion in 2022 on the RT200 scheme and in 2021 it incurred N4 billion as an expense for the Naira 4 Dollar scheme. It will be recalled that the RT200 scheme was launched in 2021 to encourage remittance inflows from Nigerians in the diaspora.
Under this scheme, the CBN offered a rebate of N5 for every $1 received by beneficiaries through licensed international money transfer operators (IMTOs). The scheme was aimed at increasing the supply of foreign exchange and reducing the pressure on the Naira.
The Naira4Dollar scheme was introduced in 2022 to stimulate exports and foreign direct investment (FDI). Under this scheme, the CBN offered a rebate of N5 for every $1 remitted by exporters and investors through licensed IMTOs. The scheme was aimed at diversifying the sources of foreign exchange and supporting export-oriented businesses.
According to the CBN, the two schemes were successful in attracting foreign exchange inflows and enhancing the stability of the naira.
“Rebate expenses represent expenses incurred by the CBN in connection with the RT200 and Naira 4 Dollar schemes which the bank introduced to enhance foreign currency inflow, diversify the sources of FX inflow, increase the level of non-oil exports, ensure stability and sustainability of FX inflows, and support export-oriented companies to expand their export operations and capabilities”, the report said.
Reacting to the development, the Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, in a programme monitored by Daily Sun, labelled the incentives as a promo that was designed to increase awareness and inflows of the Nigerians in the Diaspora into the system.
He noted that the initiatives were unusual for the CBN to engage in. He said, “According to the CBN, it is aimed at reducing the cost of remittances from the current rates charged by the IMTOs. So what was challenging with this was that it is very unusual for policies to be tied around promos as it is only manufacturers who use promos to push or launch products or even airlines who use promos too.
So it is very unusual for the government to engage in this kind of promos. What we heard was that the estimated turnover was about $5-7 million a day and it is expected to rise to $30 million per day. In other words, we will get $600 million.
That is not the point, the point is that this was a depreciation of 1 per cent of the currency because the I&E window rate had gone up from $390 to $411 and so if you add N5, it is another 1 per cent. Normally, the exchange rate was unchanged but in reality it is a depreciation of 1 per cent de facto. Were there risks associated with the initiatives? Yes, because some people were round-tripping or using arbitrage in the system”, he said.
Sunnews