Central Bank of Nigeria Tightens Rules on Export Proceeds Repatriation

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:

1. 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.
2. 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.
3. 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.