First Bank Chairman Advises SMEs to Access CBN FX Window
Mrs. Ibukun Awosika, chairman of First Bank Nigeria Limited, has urged Small and Medium Scale Enterprises- SMEs, to patronise the Central Bank of Nigeria’s (CBN) special foreign exchange window for SMEs.
Speaking at a forum on ‘FX for SMEs’ organised by First Bank to enlighten SMEs on the process and eligibility criteria required to access the CBN SME forex window, the chairman said that SMEs should see the CBN FX window as opportunity to reduce their cost of production.
“In an environment where cost is already high, businesses are looking for every opportunity to reduce costs. As a business person, you should engage every opportunity that helps you reduce cost in a sustainable manner. This forum is to ensure that SMEs understand the FX opportunities available to them”, Awosika said
Mrs Eloho Ogude, Head, Product Development, First Bank, at the forum said: “The main benefit of this new window is to reduce the pressure on forex, address FX volatility and boost the economy. It will ensure FX liquidity and help SMEs transact better.”
“SMEs are entitled to a maximum of $20,000 per quarter to import physical goods to the country at an exchange rate of N360 with no bank charges. In general CBN has allowed registered businesses or incorporated companies that are of SME size to access this intervention fund as well. The facility is strictly for SME sized businesses with employees ranging from11 to 199 and asset base between 5million to 500million. “The Form Q is a very simple form introduced by CBN specifically for processing forex for SME. SMEs are required to fill the Form Q, write an application letter to the bank, indicate the offshore beneficiary details, submit a proforma invoice and must have a banking relationship with the bank for, at least, six months.
“Although SMEs are entitled to utilise this FX for importation, there are 41 items that CBN has restricted from accessing this intervention fund,” Ogude explained.
Mrs Awosika urged SMEs involved in the production of these restricted items, saying: “Don’t look at this list of 41 items in absolute terms. It is important to note that, the restriction is on importation of finished products. Even if your products are within those restricted items, take time to understand the intermediate products towards your final products. Examine your business’ value chain or product flow to find the items that you are allowed to import. You can pay for the item that is allowed using the $20,000 window at the CBN rate and buy other one that is not allowed from the market at prevailing parallel rate. You would be incurring a diluted cost which reduces the overall cost in terms of FX for your business. That’s how you need to look at this situation. We are working hard to ensure affordable financing”.
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