Diaspora remittance spurs external reserves on CBN RT200 policy
By Jeph Ajobaju, Chief Copy Editor
External reserves climaxed at $39.22 billion in July from $39.17 billion at the beginning of the month, an increase of $45.3 million, says the latest data released by the Central Bank of Nigeria (CBN).
Analysts attributed the increase to CBN RT $200 billion Foreign Exchange Programme launched in February to boost foreign exchange (forex) earnings from non-oil exports.
“The increase in foreign exchange inflows from the non-oil sources, through the CBN RT200 FX programme and increase in diaspora remittances, may have contributed to the increase in Nigeria’s external reserves in July,” said Wole Adeye, an analyst at PAC Holdings.
Under RT200, non-oil exporters are paid N65.00 for every $1.00 repatriated and sold at the Investors & Exporters Foreign Exchange Window (I & FX) to Authorised Dealing Banks (ADBs) for other third-party use.
They are paid N35.00 for every $1.00 repatriated and sold at the I & FX for own use on eligible transactions only.
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Impact of RT200
The rebate scheme is one of the five key anchors of RT200 and the CBN aims to raise $200 billion in forex earnings from non-oil exports proceeds over the next three to five years.
CBN Governor Godwin Emefiele disclosed last month Monetary Policy Committee (MPC) members applauded RT200 and similar initiatives for improving accretion to reserves and stabilising the exchange rate.
“The MPC noted that foreign exchange inflow through the RT200 FX Programme in Q1 and Q2 2022 had increased substantially to approximately $600 million as at June 2022.
“Members also noted the increase in Diaspora remittances as a result of the Naira for Dollar incentive and urged the Bank not to relent in its efforts to encourage foreign exchange inflow to the economy,” Emefiele said, per reporting by ThisDay.
Despite the increase in the price of crude oil, external reserves depreciated by $1.3 billion, from $40.52billion in December 2021 to $39.22 billion on 29 July 2022.
According to CBN data, the reserves hovered around $40 billion in January, slid to $39 billion between February and April, further slumped to $38 billion in May, and closed at $39.16 billion on 30 June.
The monthly gyrations show the reserves at
- January – $40.04 billion (down by $481.4 million)
- February – $39.86 billion (down by $121.4 million)
- March – $39.55 billion (down by $317.8 million)
- April – $39.58 billion (up by $41.5 million)
- May – $38.48 billion (down by $943.07 million)
- June – $39.16 billion (up by $674.4 million)
The decline in external reserves runs counter to a steady increase in global oil prices as energy costs soar amid fears of worldwide economic shock from Russia’s invasion of Ukraine.
CBN daily crude oil price closed at $120.36 per barrel (bp) on 31 July, a 50.32 per cent increase from $80.07 pb on 1 January.