The Central Bank of Nigeria (CBN) has announced the immediate suspension of approvals for extensions on the repatriation of export proceeds. This directive, issued in a circular dated January 8, 2025, applies to both oil and non-oil export transactions, aiming to enforce compliance with existing foreign exchange regulations.

Key Provisions

The directive, signed by W.J. Kanya, the acting Director of the CBN’s Trade & Exchange Department, references the Foreign Exchange Manual (Revised Edition, March 2018), specifically Memorandum 10A (23a) and Memorandum 10B (20a).

Exporters are now required to strictly adhere to the stipulated timelines for repatriating proceeds:

• Non-Oil Exports: Must be repatriated within 180 days from the bill of lading date.
• Oil & Gas Exports: Must be repatriated within 90 days from the bill of lading date.

The CBN emphasized that these timelines are non-negotiable and that extensions previously granted through authorized dealer banks will no longer be approved.

Implications for Exporters and Banks

Exporters and their authorized dealer banks are now obligated to ensure compliance with these rules. Banks are expected to notify their clients of the updated regulations and take proactive measures to enforce adherence.

Failure to comply with the new guidelines may attract penalties or other regulatory actions from the CBN.

The circular stated:
“With effect from the date of this circular, the Central Bank of Nigeria will no longer approve requests for extension of repatriation of export proceeds by Authorized Dealers on behalf of their customers. Proceeds of oil and non-oil exports are to be repatriated and credited into the exporters’ export proceeds domiciliary accounts within the stipulated timelines.”

Background and Policy Objectives

The policy aligns with the CBN’s broader strategy to enhance foreign exchange inflows and strengthen Nigeria’s foreign reserves. This move follows a series of measures introduced last year to regulate foreign exchange transactions by exporters, including international oil companies (IOCs).

• Previous Measures for IOCs:
  • Limited immediate remittance of 100% forex proceeds to parent companies abroad.
  • Required IOCs to repatriate 50% of proceeds immediately and the remaining 50% within 90 days.
  • Mandated prior approval for cash pooling under the CBN’s framework and detailed reporting on expenditures before pooling.

These measures allowed IOCs to use part of their proceeds to meet financial obligations within Nigeria while selling a portion to authorized foreign exchange dealers.

Potential Impact

This latest directive imposes stricter obligations on exporters, particularly those who rely on extensions for repatriation compliance. By reinforcing these rules, the CBN aims to:

• Increase foreign exchange liquidity.
• Mitigate delays in foreign currency inflows.
• Boost confidence in Nigeria’s foreign exchange market.

The policy is expected to have significant implications for exporters, financial institutions, and the broader economy as stakeholders adjust to the new framework.