The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele delivered an address on Friday 25th November, 2022 at the 57th Annual Bankers Dinner in Lagos.
The theme for the event was “Radical Responses to Abnormal Episodes: Time for Innovative Decision-making.”
Here are the key points from the speech given by Emefiele at the Bankers’ Dinner as seen by MoneyCentral:
The country is unable to meet its meagre production quota as recorded domestic crude oil production plunged from over 1.9 million barrels per day as of April 2020 to 1.1 million barrels per day by September 2022.
Given Nigeria’s dependence on crude oil for close to 80 percent of our foreign exchange earnings, the drop in production has resulted in a significant drop in our foreign exchange earnings as well as government revenue.
The downward short-run trend of the external reserves reappeared at the beginning of 2022. Accordingly, after recovery from US$33.7 billion in March 2020 to US$41.6 billion in September 2021, official reserves fell to about US$37 billion as at October 2022.
Official foreign exchange receipt from crude oil sales into Nigeria’s official reserves has dried up steadily from above US$3.0 billion monthly in 2014 to an absolute zero dollars today.
Invisibles Driving FX Demand
The number of student visa issued to Nigerians by the UK alone has increased from an annual average of about 8,000 visas as of 2020 to nearly 66,000 in 2022, which implies an eight-folds surge to about US$2.5 billion annually in study-related foreign exchange outflow to the UK alone.
It is against the backdrop of the worsening mismatch between foreign exchange market demand and supply, and the need to boost foreign exchange earnings that the CBN and the Bankers’ Committee initiated the RT200 programme in February 2022.
Market demand for both goods and invisible transactions has continued to increase under various uses in the face of dwindling supply of foreign exchange.
The programme was fundamentally devised to innovatively tackle the fundamental problem associated with the repatriation of non-oil export proceed. So far, we have recorded and continue to record resounding success with the RT200 Programme.
Inflows through this programme in 2022 rose to about US$1.6 billion and could surpass US$2.5 billion by year-end. Under the rebate scheme of the programme, the Bank has reimbursed a total of N78.4 billion naira.
Monthly average capital outflows from Nigeria year-to-date is less than one-third of its value in 2019 having declined from US$1.37 billion monthly to US$0.58 billion monthly in 2022.
The eNaira was developed to broaden the payment possibilities of Nigerians, foster digital financial inclusion, with potential for fast-tracking intergovernmental and social transfers.
So far, a total of N8 billion, consisting over 700,000 transactions, has passed through the eNaira platform.
The National Domestic Card Scheme
To further strengthen the payments system while conserving foreign exchange, the CBN is collaborating with the Nigerian Inter-Bank Settlement System (NIBSS) to launch The National Domestic Card Scheme.
This is expected to lower operating costs for banks incurring huge charges for foreign card schemes. It will also reduce the huge foreign exchange commitments associated with operating foreign card schemes.
The scheme is expected to commence on 16 January 2023. With this, Nigeria will join a growing list of EMDEs (including India, Turkey, China, and Brazil) that have launched domestic card schemes.
This landmark initiative shall position Nigeria as the first African country to introduce a domestic card scheme, that combines a fully domestic infrastructure with international interoperability.