Home Business CBN forecloses forex rebate for raw produce exporters

CBN forecloses forex rebate for raw produce exporters

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Raw produce exporters will no longer have access to foreign exchange (Forex) rebate, the Central Bank of Nigeria (CBN) has said.

Rather than grant rebate to portfolio businessmen, the bank spoke of plans to grant facilities to farmers to expand their plantations.

CBN Governor Godwin Emefiele, who dropped the hint at the end of the Bankers’ Committee meeting in Abuja, said granting forex rebate to exporters of raw produce “has the capacity of creating inflation”.

Defending the decision, Emefiele noted 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”.

According to Emefiele, the CBN said its doors remained 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 went on: “For now the CBN is interested in looking at now it is going to make Forex available for businesses into semi processed, processed and wholly finished products.

“This decision he said will encourage young and fresh graduates to start their own manufacturing businesses instead of waiting for jobs.

“It is also an opportunity for our young brothers and sisters, young graduates. It’s good for you to wait for a job but if the job is not coming, what’s wrong with you going into business of blending beans, dry it up; package it and export it and you make money.

“You can get small loans at five per cent when you export, the dollar comes in the export proceeds, or you are into IT development or software development and sell, you earn your naira and you also earn your rebate for it.”

Assuring that the forex rebate initiative will not impact negatively on local businesses, the CBN boss said: “FX funding for export creates market opportunities for us. It is here to expand the economy and create economy captivity that will grow our GDP. In fact also even help our price stability mandate. This is all an overall approach to broaden and diversify the base of the Nigerian economy.

Emefiele, who explained the forex rebate initiative, said “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.”

Emefiele noted that entrepreneurs can now go to a bank and access credit at five per cent through any of its interventions. “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.”

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