The Central Bank of Nigeria (CBN) has issued a circular announcing the immediate suspension of approvals for the extension of export proceeds repatriation on behalf of exporters.
Dated January 8, 2025, the directive applies to both oil and non-oil export transactions, marking a significant policy shift aimed at ensuring compliance with existing regulations.
The circular was signed by Dr W.J. Kanya, the acting Director of the CBN’s Trade & Exchange Department and released on Thursday.
Key provisions of the circular
In the circular titled “Suspension of Extension of Export Proceeds on Behalf of Exporters,” 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:
Immediate suspension of extension requests:
Effective January 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.
Timelines for repatriation:
For non-oil exports, proceeds must be repatriated and credited to the exporters’ 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.
Implications for exporters and banks
The CBN’s 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 Nigeria’s 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.
What you should know
Early last year, the Central Bank of Nigeria stopped international oil companies (IOCs) operating in Nigeria from immediately remitting 100% of their forex proceeds to their parent company abroad.
According to a circular, IOCs were allowed to repatriate only 50% of their proceeds immediately while the other 50% would be repatriated 90 days from the day of inflow.
- The apex bank also introduced rules that would guide “cash pooling” 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 “cash pooling.”
- 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% of their repatriated export proceeds as required.
- Also, the circular specified that the remaining 50% 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.
- The CBN also announced that IOCs can sell 50% balance of their repatriated export proceeds to authorized forex dealers.
