The Central Bank of Nigeria (CBN) has issued a clarification on the requirements for divestments and repatriation of foreign investments related to the Certificate of Capital Importation (CCI).
In a circular signed by Dr. W.J. Kanya, the Acting Director of the Trade & Exchange Department, the CBN outlined the documentation required for these transactions, reiterating its commitment to ensuring compliance in foreign exchange activities.
According to the circular, the provisions of the Foreign Exchange Manual, specifically Memorandum 20, section 2(vi), are applicable to both divestments and the repatriation of investments linked to CCI transactions.
CBN demands transaction evidence
To ensure full compliance, the CBN has mandated that every divestment or repatriation of foreign investment—whether it involves pre-liquidation or matured investments—must be accompanied by two key documents:
- Evidence of electronic Certificate of Capital Importation: This document is crucial for verifying that the initial capital importation was duly recorded and acknowledged.
- Evidence of redemption of investment in local currency assets: This includes proof of redemption in money market instruments, debt securities, equities, or other relevant local currency assets.
The circular read: “This is to clarify that the Foreign Exchange Manual, Memorandum 20 section 2 (vi) applies to both divestments and repatriation of all Certificate of Capital Importation (CCI) related transactions.
“For the avoidance of doubt, every divestment or repatriation of foreign investment be it a pre-liquidation or matured investment, should present the following documents:
“a) Evidence of electronic Certificate of Capital Importation. b) Evidence of redemption of investment in local currency assets (money market instrument, debt securities, equities, etc.).”
The circular emphasized the importance of these documents in facilitating smooth and lawful foreign investment transactions in Nigeria.
The CBN urges all parties involved in such transactions to comply with these requirements to avoid any regulatory breaches.
What you should know
The Foreign Exchange Manual of the CBN, which was introduced in 1995 and was last revised in 2018, contains detailed information guiding on foreign exchange transactions in the country.
The apex bank earlier stopped International Oil Companies (IOCs) operating in Nigeria from immediately remitting 100% of their forex proceeds to their parent company abroad.
According to the initial circular, IOCs are allowed to repatriate only 50% of their proceeds immediately while the other 50% will be repatriated 90 days from the day of inflow.
It further issued clarifications on the utilization of foreign exchange proceeds by IOCs and another circular announcing that IOCs can sell 50% balance of their repatriated export proceeds to authorized forex dealers.
Nairametrics earlier reported that Foreign direct investors tripled their asset disposals in Nigeria, reaching a staggering $200 million, according to the CBN’s economic report for the third quarter of 2023.
This figure highlighted a growing trend of foreign subsidiary divestiture, with multinational corporations transferring business activities outside Nigeria.
