In a decisive move aimed at bolstering foreign
exchange liquidity and ensuring strict compliance with extant regulations, the
Central Bank of Nigeria (CBN) has issued a directive suspending the extension
of repatriation deadlines for export proceeds. The circular, dated January 8,
2025, is expected to have a significant impact on exporters, financial
institutions, and Nigeria's foreign exchange market.
Key Provisions of the Directive
According to the circular titled
"Suspension of Extension of Repatriation of Export Proceeds on Behalf of
Exporters," the following are the primary directives:
- Immediate
Effect: The CBN has
stated that, effective January 8, 2025, Authorized Dealer Banks can no
longer request extensions for the repatriation of export proceeds on
behalf of their clients.
- Strict
Timelines for Repatriation:
- Proceeds
from oil and gas exports must be repatriated and credited to
exporters' domiciliary accounts within 90 days from the date on
the bill of lading.
- Proceeds
from non-oil exports must be repatriated and credited within 180
days from the date on the bill of lading.
- Compliance
Enforcement: Authorized
Dealer Banks are required to ensure that their clients comply with these
regulations and are expected to actively educate exporters about the
implications of this directive.
Implications for Exporters and Financial
Institutions
The new policy marks a shift in Nigeria's
foreign exchange management strategy, with the following implications:
- Exporters
Under Pressure:
Exporters, particularly in the oil and gas and non-oil sectors, will now
have to adhere strictly to the stipulated timelines to avoid penalties.
The suspension of extensions eliminates the flexibility that exporters
previously enjoyed, necessitating more efficient cash flow management and
adherence to regulatory requirements.
- Increased
Responsibilities for Banks:
Authorized Dealer Banks will have to play a more proactive role in
ensuring their clients' compliance. This includes raising awareness,
monitoring transactions, and enforcing repatriation timelines to avoid
falling afoul of the new directive.
- Impact on
Foreign Exchange Liquidity:
The directive is part of the CBN’s broader efforts to increase foreign
exchange inflows, which could stabilize the naira and reduce pressure on
Nigeria’s foreign reserves. By enforcing stricter timelines for
repatriation, the CBN aims to ensure that export proceeds are promptly
reintegrated into the economy.
Call to Action for Exporters
Exporters with outstanding proceeds are urged
to immediately make arrangements to remit funds into their export proceeds
domiciliary accounts. Non-compliance could result in regulatory penalties or
other enforcement actions.
Final Thoughts
This latest move by the CBN underscores its
commitment to strengthening Nigeria’s foreign exchange regime and enhancing
transparency in export transactions. While the directive may pose initial
challenges for exporters, it ultimately aims to foster a more robust and stable
economic environment. Exporters and banks alike must adapt swiftly to this
regulatory change to ensure seamless compliance and contribute to Nigeria’s
economic growth.
For more details, refer to the full circular onthe CBN’s website or consult with your bank for personalized guidance.
