FINANCIAL experts have advised the Central Bank of Nigeria, CBN to focus on finding the right “degree of tightness” in monetary policy to keep the economy stable and boost agro exports.
According to him, while the bank must implement prudent monetary policy, the government can improve the nation’s balance of payment position by promoting agriculture commodities.
He noted that the economy has been exposed to risks stemming from the external environment, fiscal pressures and weaknesses in the sector. He therefore canvassed implementation of prudent macroeconomic policies with low fiscal deficits and a flexible exchange rate sheltered from external vulnerabilities.
According to them, for the incoming government to start on a good footing, soundness and transparency of the financial sector must remain the main domestic policy challenge, and every effort must be channeled towards addressing credit quality, liquidity and capital adequacy concerns that would keep financial risks elevated.
While pushing for strong structural reforms across all sectors, the NCAN boss said revamping the agro sector is essential not only to improve trade competitiveness, but to encourage more Nigerians to explore new opportunities as the food sector gets more integrated into the global economy.
He said a pragmatic policy impetus by the government will provide the much required stability to agric exports, apart from measures meant to help the government acquire international presence in commodities wherein it has comparative advantage.
They stressed the need to sustain the momentum in agriculture exports in coming few years by revitalising the Export Expansion Gran, EEG, reducing transaction costs time, better port gate management and introducing fiscal incentives that will contribute towards the transformation of the economy. In this direction, he called on the CBN to relax its position on repatriation of export proceeds, reduce interest rate and reform the foreign exchange market.
According to them, it will help the government to achieve more by supporting the agriculture sector with effective and hassle-free agriculture credit, with a special focus on small and marginal farmers, adding that farm credit will underpin the efforts of hard-working farmers.
The revival of the EEG, according to Moses Itie, secretary, Farm Suppliers Association of Nigeria, FUISAN, was scripted to promote value-addition industry especially in the agricultural sector.
The suspension of the EEG scheme by government for almost two years has generated several criticisms from agro-processors and players in the value-addition sector, describing it as a disincentive and elixir to raw commodities’ exportation.
The Export Expansion Grant, EEG, until now remains the only functional incentive of all instruments introduced by government to encourage exporters of non-oil products immensely essential.
The scheme was introduced as a form of buffer for those who export non-oil products from Nigeria so that they could be encouraged to expand their production base, add more value and foray into new markets. With the Grant, exporters are entitled to certain percentage of their turnover so that they could continue in business.
The incentive was also introduced bearing in mind that Nigeria’s infrastructure and business climates are not particularly healthy for business.
Indeed, manufacturers in Nigeria are more of local governments in their own rights because they have to get their own water, their own light, construct their own road and then face numerous government agencies after they might have finished production.
With various commodities markets opening up for export, the ability of Nigerian exporters to exploit these markets hinges on their ability to compete effectively and profitably.
Moses had stressed that Nigeria’s first step towards actualising a significant global market share was to produce more cocoa.
“We need to increase our production of cocoa and from there, make improvements in the value chain by increasing value addition. More factories should be established to produce made in Nigeria chocolate, while we drastically cut down on the export of raw cocoa,” he said.
“We support the Nigerian Industrial Revolution Plan, NIRP, and with the proposed Cocoa Corporation Board which we are all in support of, that will make it easier for stakeholders to come together and share information on cocoa. While the Board will be funded by the government, the private sector will be allowed to drive its activities,” he said.