The Central Bank of Nigeria (CBN) has taken a decisive step to tighten foreign exchange controls by suspending the extension of deadlines for export proceeds repatriation.
This new directive applies to all exporters, including those in the oil and non-oil sectors, and took effect on January 8, 2025.
The circular was signed by Dr W.J. Kanya, the acting Director of the CBNโs Trade & Exchange Department and released on Thursday.
In the circular titled โSuspension of Extension of Export Proceeds on Behalf of Exporters,โ the apex bank cited the provisions of Memorandum 10A (23a) and Memorandum 10B (20a) of the Foreign Exchange Manual (Revised Edition, March 2018) as the basis for its decision. The directive outlines the following key measures:
It said fromJanuary 8, 2025, the CBN will no longer approve requests by authorized dealer banks to extend the timeframe for the repatriation of export proceeds on behalf of their customers.
This means exporters must comply with the stipulated timelines for the repatriation of proceeds without relying on extensions.
For non-oil exports, proceeds must be repatriated and credited to the exportersโ domiciliary accounts within 180 days from the bill of lading date.
For oil and gas exports, the timeframe is 90 days from the bill of lading date.
The CBN emphasized that these timelines are non-negotiable, and exporters must strictly adhere to them.
The CBNโs decision places greater responsibility on exporters and their authorized dealer banks to ensure compliance with the stipulated timelines.
Authorized dealer banks have been directed to notify their customers of this development and ensure adherence to the existing regulations. Failure to comply could lead to penalties or other regulatory actions.
This policy is expected to tighten control over foreign exchange inflows, ensuring that export proceeds are promptly repatriated to support Nigeriaโs foreign exchange reserves.
By eliminating the option for extensions, the CBN aims to discourage delays in repatriation, which have been a source of concern for regulators seeking to stabilize the naira and improve liquidity in the foreign exchange market.
Early last year, the Central Bank of Nigeria stopped international oil companies (IOCs) operating in Nigeria from immediately remitting 100 per cent of their forex proceeds to their parent company abroad.
According to a circular, IOCs were allowed to repatriate only 50 per cent of their proceeds immediately while the other 50 per cent would be repatriated 90 days from the day of inflow.
The apex bank also introduced rules that would guide โcash poolingโ by IOCs. They included approval from the CBN before the repatriation of funds under the cash pooling framework, the parent entity of IOCs will have to reach an agreement with the CBN before โcash pooling.โ
The bank further required IOCs to submit statement of expenditure incurred in the period prior to the cash polling.
About eight months ago, the apex bank issued further clarifications on the utilization of foreign exchange proceeds by IOCs.
The circular stated that oil companies are allowed to immediately pool the initial 50 per cent of their repatriated export proceeds as required.
Also, the circular specified that the remaining 50 per cent of the repatriated funds can be used by the oil companies to settle their financial obligations within Nigeria, as needed, during a prescribed 90-day period.