In our opinion, NAFEX offers a more transparent alternative to accessing FC than is available through the other foreign-exchange markets in the country.

Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele

By Emma Ujah, Abuja Bureau Chief

When Mr. Godwin Emefiele was appointed Governor of the Central bank of Nigeria (CBN), five years ago, he assumed office with a focus- to run “a people oriented CBN.”

Since then and in line with this commitment, the governor has introduced policies and programmes that targeted the real sectors of the economy.

Anchor Borrowers Programme

The most popular is the Anchor Borrowers Programme (ABP) aimed at rejuvenating the nation’s agricultural sector.

Anchor Borrowers Programme was designed to lift thousands of smallholder farmers out of poverty and generate millions of jobs for unemployed Nigerians. Crops such as rice, wheat, maize and cassava have been captured under this programme.

Under the ABP, farmers were provided inputs, improved seeds, chemicals, fertilizers and extension services.  In addition, the farmers were helped to sell their produce in a seamless manner through the off-taker arrangement.

This is one programme that was said to have endeared Emefiele to President Buhari, as indeed, many peasant farmers have become millionaires.

It has also drastically reduced the quantity of imported rice into the country.

Forex restrictions on 43 Items 

The decision to exempt importers of  43 Items from the official forex market  in 2015 was a master stroke. Until then, it was a common cry at public functions that Nigerians were wasting forex on frivolities, including the importation of toothpick.  In announcing the directive, the governor, said he would not allow such waste of forex any longer.

Forex: Investors & Exporters window records $35b inflows — CBN


According to him, not only would the policy conserve forex for critical sectors such manufacturing but would see to the growth of local production of the items.

In December last year, the CBN issued a stern warning to banks, against circumventing the policy.  It claimed that its Economic Intelligence Unit had found that some banks were collaborating with unscrupulous members of the society to frustrate the policy.

Anchor Borrowers’ Programme created 2.5m jobs — CBN

The apex bank was firm, as it told the banks to fully comply or risk heavy sanctions, if they continued to provide forex to importers of the exempted items.

The affected items were: Rice, Cement,  Margarine, Palm kernel/Palm oil products/vegetables oils, Meat and processed meat products, Vegetables and processed vegetable products.

Others are: Poultry chicken, eggs, turkey, Private airplanes/jets, Indian incense, Tinned fish in sauce (Geisha)/sardines, Cold rolled steel sheets, , Galvanized steel sheets, Roofing sheets, Wheelbarrows, Head pans, Metal boxes and containers, Enamelware Steel drums, Steel pipes, Wire rods(deformed and not deformed), Iron rods and reinforcing board, Wire mesh, Steel nails,  Security and razor wine, Wood particle boards and panels, , Wood Fibre Boards and Panels,  Plywood boards and panels and Wooden doors.

The rest are: Toothpicks, Glass and Glassware, Kitchen utensils, Tableware, Tiles-vitrified and ceramic, Textiles, Woven fabrics, Clothes, Plastic and rubber products, polypropylene granules , cellophane wrappers, Soap and cosmetics and Tomatoes/tomato pastes. In addition, those interested in investing in Eurobond/foreign currency bond/ share purchases, were asked to source their foreign exchange from outside the CBN.

Fertiliser and textiles were later added to the list of initial list of 41 items bringing the numbers to 43.


Closely related to the agricultural revolution being undertaken by the CBN in collaboration with the Federal Ministry of Agriculture and other relevant agencies was the establishment The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL)  an agribusiness initiative which provides its clients risk management. It was established to increase lending in agriculture and its value chains.

The company essentially administers a risk sharing fund designed to identify, redefine, measure, re-price and evolve strategies to de-risk and catalyze lending to the Nigerian agriculture value chain.

It was subsequently incorporated as a Public Limited Liability Company and licensed as a Non-Bank Financial Institution with the primary mandate of facilitating the flow of credit to agribusiness value chain players and collaborating with stakeholders to fix broken agricultural value chains in Nigeria.

Only recently, the NIRSAL Micro Finance Bank was established to deal with the problem of Micro, Small and Medium Enterprises’ inability to access finance from the Deposit Money Banks and even the existing MfBs.

With a N5 billion capitalization, NIRSAL MfB has a large pool of funds from which to draw and lend to small businesses in the country.

It has started with an initial seven branches which would soon be extended to all state capitals.

NIRSAL MfB is unique in the sense that it would provide customers loans at single-digit rate and even provide adequate moratorium to enable them mature before they start re-payment of their loans.

I&E forex window

At the peak of the foreign exchange challenge, in 2017, Emefiele came up with the idea of the Investors and Exporters (I & E) window at the forex market.

The I&E forex window was introduced to address these challenges. According to the CBN, the objective of the window is to boost liquidity in the foreign exchange market and ensure timely execution and settlement for eligible transactions. In a circular issued on April 21, 2017 introducing the window, the CBN stated that, “Eligible transactions in the window include: Invisible transactions (excluding International Airlines Ticket sales’ remittances), Loan repayments, loan interest payments, dividends/income remittances, capital repatriation, management services fees, consultancy fees, etc; Bills for collection and; Any other trade-related payment obligations (at the instance of the customer).

The apex bank further stated that, “The supply of foreign currency to the window shall be through portfolio investors, exporters, authorised dealers and other parties with foreign currency to exchange to Naira. The CBN shall also be a market participant at this window to promote liquidity and professional market conduct.” Transactions in the window commenced on Monday April 24, while the FMDQ introduced the Nigeria Autonomous Foreign Exchange Rate (NAFEX) as reference rate for the window.

Within one month of its introduction the I&E forex window gained confidence and credibility due to transparency of its operations visi-a-vis the determination of the ruling exchange rate, with the volume of dollars traded in the window rising to $1 billion per week in the first month of its introduction.

This led to commendation by global rating agency, Fitch Ratings, which stated: “NAFEX provides investors and exporters with a more transparent mechanism through which they can sell foreign currency to willing buyers. Authorised banks act as intermediaries, clearing funds supplied by portfolio investors and exporters and ensuring timely execution of settlement for buyers. “Despite its short record, volumes transacted through NAFEX are growing. In our opinion, NAFEX offers a more transparent alternative to accessing FC than is available through the other foreign-exchange markets in the country. Several exchange rates operate in Nigeria.”

Vanguard analysis showed that the foreign exchange inflow through the I&E forex window has been growing. From April 2st when the window commenced operations to December 31st 2017, $24 billion was traded in the window, while foreign investors, exporters and other non CBN players injected $6 billion. Further analysis showed that in 2018, the I&E forex window attracted $33.34 billion inflows with, foreign investors, exporters and other non CBN players injecting $23.89 billion.

Heritage Bank complements CBN in agric finance

The impact of these huge inflows is reflected in the steady increase in the nation’s external reserves. From $30.8 billion at the end of April 2017, a week after the I&E forex window was introduced, the reserves rose steadily to a peak of $48 billion at the end of May 2018. The steady growth in the nation’s external reserves also led to appreciation of the naira in the nation’s foreign exchange market, which culminated to the convergence of the parallel market exchange rate and the I&E forex window rate within the first six months of the window.


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.