According to the President, Federation of Agricultural Commodity Associations, Dr. Victor Iyama, many operators in the sector are battling huge debts from bank loans, which is making them to either reduce staff strength substantially or shut down operations.

Iyama attributed the challenges in the sector to the CBN foreign exchange utilisation policy, noting that since the implementation of the policy, most non-oil exporters had gone bankrupt. He was specifically referring to the CBN’s policy on the utilisation of foreign exchange.

In March this year the CBN Governor, Mr Godwin Emefiele, said the apex bank is prepared to enforce the repatriation of dollar-proceeds from exports and is planning sanctions against those not complying. In February, the CBN introduced trading rules under which banks will be able to purchase foreign exchange only if they have a prior order from a corporate customer, such as a fuel importer or foreign mobile phone company looking to repatriate profits or dividends.

Now, policy makers are looking at exporters to ensure hard currency liquidity within Nigeria, pondering sanctions against exporters who fail to repatriate proceeds and funnel them back into the official market within the stipulated 90-day limit.

“If they refuse to sell your export proceeds that you repatriate in the foreign exchange market … we will ban them from accessing foreign exchange in the Nigerian foreign exchange market,” Emefiele said. He explained that much of the pressure on the Naira was due to activity of importers and exporters, the former front-loading purchases of hard currency while the latter were hoarding their overseas cash earnings.

The result on the currency markets has forced the CBN to intervene, and this led to a steep drop in Nigeria’s foreign cash reserves.

However forcing exporters to comply with existing regulations on their use of their foreign currency income has removed the major attraction to the export business.

Tecdani