Deposit Money Banks [DMBs] in the country yesterday announced that as part of their contribution to the Nigerian economy, it has concluded plans to float a N25 billion yearly Fund to finance export – based products as a way of diversifying Nigeria’s foreign exchange [FX] earnings to address supply challenges currently being faced by the country and restore the Naira’s value.
Nigeria’s foreign reserves has dropped drastically from USD59.37 billion as at March 28, 2007 to a low level of $24 billion last year until late last month when it began to pick up again, now berthing at a little above $28 billion, largely driven by low oil prices at the international market as well as quantity shock as a result of vandalism of oil installation in the Niger Delta Region of the country. The consequence of this has brought undue pressure on the Naira because of the scarcity of FX as the country is unduly import – dependant and depends largely on crude oil proceeds alone for her FX earnings.
Now, to address the narrative, the banks under the aegis of Bankers’ Committee said the Fund which is to take off this year would derive from each deposit money bank’s 5 per cent of profit after tax.
Given the banks’ three year financial results , it is estimated that between N24.5 billion to N25 billion yearly will be pooled into the Fund to be held at the Central Bank of Nigeria [CBN] and jointly owned by the banks based on equity contribution, according to the new Director of Banking Supervision, Mr. Ahmad Abdullahi at a press conference at the end of the meeting in Abuja.
He explained that the facility with a maximum financing tenor of 10 years will be deployed to identified projects particularly in the agriculture and allied sector as well as other sectors with high potentials of FX earning for the country through export as part of fast – tracking diversification of the economy as well as import substitution to reduce the high demand of FX for items that can be manufactured locally.
Abdullahi said : “ To help diversify the Economy fast, the Bankers’ Committee has come up with an initiative that five per cent of each bank’s profit after tax will be pooled and kept at the CBN and it will be used to finance eligible, bankable projects that are meant to drive export and import substitution. The scheme is to be managed by a Committee which will screen projects submitted by entrepreneurs. The Fund has a maximum tenor of ten years financing for a project.’
Explaining further, the Banking Supervision Director said unlike other schemes which run on interest, this initiative will be run on equity holding between the banks and the entrepreneurs, with the banks recovering their investment from the profit generated by the projects while the economy as well as the entrepreneur equally benefit .
Also , another decision taken at the yesterday meeting was the plan to resume the cashless policy implementation across the remaining 30 States of the Federation where the policy had not been taken to before its suspension in 2014.
The apex bank Deputy Director/ Head of Shared Services in the Governor’s Department, Mr. Chidi D. Umeano at the briefing said arrangements have been concluded for the resumption of the plan in the remaining states begining on the 1st of May this year; 1st of August and finally 1st of October with each batch covering 10 states each. The implementation of the policy had been effected in only five States and the Federal Capital Territory. The States include : Lagos, Ogun, Anambra, Abia and Kano. The highpoint of the policy is the abolition of cash payment or lodgments for individuals of more than N500,000 daily, with any excess payment or lodgment of the amount attracting a fine.