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CBN to bar exporters with unrepatriated export proceeds from banking services

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CBN to bar exporters with unrepatriated export proceeds from banking services
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The Central Bank of Nigeria (CBN) has announced the prohibition of all Nigerian exporters who are yet to repatriate their export proceeds, from banking services effective from January 31, 2021.

The apex bank had in an earlier circular warned that failure to repatriate exports within 90 days for oil and gas and 180 days for non-oil exports constitute a breach of the extant regulation.

In a letter issued by one of the commercial banks to its exporters, it cited the CBN’s new circular stating that it will bar exporters who do not repatriate from accessing banking services.

Excerpts of the CBN circular barring exporters from accessing banking services:.

“Please be informed that the Central Bank of Nigeria (CBN) through its circular referenced TED/EXP/CON?NEX/01/001 dated 13th January 2021 has instructed that all exporters with unrepatriated export proceeds before 31st January 2021 should be barred from accessing all banking services.”

In lieu of this, all concerned exporters are urged to comply with the directive before the specified date.

Analysts believe that the directive is part of a monetary control mechanism by policymaker to maintain relative stability in the exchange rate, especially after the pandemic created a wide disparity between the official exchange and the parallel market rates, eliminating incidences of over-invoicing, transfer pricing, double handling charges, etc.

By repatriating export proceeds via the NAFEX (Investor and Exporter window) the central bank believes this will improve liquidity in the official market and perhaps strengthen the naira at the black market where wired transfers often cost a premium of N5-N10 over the street exchange rate of N475/$1.

Most export proceeds find their way to the parallel market where exporters can exchange for higher naira value-boosting their gains on foreign currency conversions.

It is to be seen if exporters will comply with this directive or seek other means of avoiding the hammer of the exporters. Most exporters already find a way to avoid these hammers by opening foreign bank accounts where most of the export proceeds are warehoused and then sold at the black market.

Some rely on complex intercompany transactions to avoid repatriating the forex through the NAFEX window

According to Bloomberg sources, the new directive applies to exports up until June last year.

In a bid to ensure prudent use of foreign exchange resources, the Central Bank of Nigeria had earlier instructed authorized dealers and exporters to only open forms M for letters of credit, bills for collection and other forms of payment

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