The Central Bank of Nigeria (CBN) has revealed in its latest report that it spent a total of N141 billion on two foreign exchange (FX) schemes; RT200 and Naira4Dollar in 2021 and 2022.
The schemes were aimed at boosting non-oil exports and diaspora remittances to increase FX inflows into the economy.
The RT200 Forex Programme was created to raise $200 billion in non-oil export earnings over the next five years. It was designed to incentivise exporters in the non-oil export sector to repatriate and sell their export proceeds in the foreign exchange market.
On the other hand, the Naira4Dollar Scheme was launched in March 2021 as an incentive for foreign money transfer senders and beneficiaries. The policy called for a payment of N5 for every $1 received in remittances.
However, the schemes were cancelled by the CBN Acting Governor, Folashodun Shonubi, after he took over from the suspended Godwin Emefiele.
Shonubi decided to cancel both schemes after he assumed office following the suspension of Godwin Emefiele over allegations of corruption and mismanagement.
Shonubi said that the schemes were not sustainable and effective in achieving their objectives. He said that the CBN would adopt a more prudent and transparent approach to managing the FX market.
In addition, the CBN is facing a huge litigation risk of N56.4 trillion from outstanding cases, including one with a judgment sum of GBP2.159 billion with 15 per cent annual interest since 1995. The CBN said that it expects to win the appeal against the judgment and that no provision was made in the financial statements.
The FX schemes that the CBN spent N141 billion on were the Race to $200 billion in FX Repatriation (RT 200) rebate and the Naira4Dollar remittance schemes. The RT 200 scheme was an initiative of the Bankers’ Committee to raise $200 billion in non-oil export earnings over five years. It offered a rebate of N65 or N25 for every $1 of repatriated non-oil export revenues, depending on the type of export.
The Naira4Dollar scheme was launched in March 2021 as an incentive for foreign money transfer senders and beneficiaries. It paid N5 for every $1 received in remittances.
The CBN said that both schemes enhanced FX inflow, diversified FX sources, and supported export-oriented companies. According to the report, repatriation due to the RT 200 scheme increased by 40 per cent from US$3.0 billion in 2021 to US$5.6 billion at the end of 2022.
The CBN also said that its contingent liabilities on outstanding litigations rose from N51.7 trillion in 2020 to N56.4 trillion in 2021. The report said that the most significant case was one with a total claim of N56.3 trillion, in which judgment was given against the CBN and other co-defendants in prior years and where the CBN’s appeal is pending before the appellate courts.
The report said that there was a second defendant on this case, who had lost at the Federal High Court and the Court of Appeal and whose matter is at the Supreme Court awaiting ruling. The report said that a high level of success is expected at the Court of Appeal based on professional legal advice and that the likelihood of outflow of economic resources is not probable.
The financial statement was signed on behalf of the board of directors by suspended CBN Governor, Godwin Emefiele, and Deputy Governor, Corporate Services Directorate, Edward Adamu. The statement showed that the CBN recorded a net income of N1.3 trillion in 2021, compared to a net loss of N1.9 trillion in 2020.
President Tinubu has said that the CBN’s financial system was “rotten” under Emefiele’s leadership. He said that measures were being taken to address the alleged irregularities.
The CBN is facing increasing scrutiny from the government and the public. It will be interesting to see how the bank responds to these challenges in the coming months.
