Eko Hot Blog reports that the Central Bank of Nigeria (CBN) has announced far-reaching measures to shore up the value of the Naira, with more liquidity in the Foreign Exchange (FX) market as it directed International Oil Companies to henceforth repatriate 50 percent of their revenue to Nigeria.
The bank also announced an end to cash Personal Travel Allowance (PTA) and Business Travel Allowance (BTA), as such allowances are henceforth to be obtained in cards.
According to Vanguard, CBN’s Director of Trade and exchange, Dr. Hassan Mahmud, issued two different circulars on the two measures which were released to Dealer banks Wednesday night.
CBN Governor, Michael Cardoso
Until now, IOCs paid their FX earnings 100 percent directly to their parent companies through what is called Subsidiary pools, without the Nigerian FX market benefitting from their export proceeds.
However, under the new policy, the CBN said IOCs will no longer be allowed to remit 100% of their forex proceeds to their parent company abroad as soon as they are earned.
Instead, they will be allowed to repatriate only 50% of their proceeds immediately while the other 50% must be repatriated to Nigeria and the amount held for at least 90 days in Nigeria from the day of inflow before being allowed to be taken out of the country.
The apex bank therefore directed, “banks to pool cash on behalf of IOCs, subject to a maximum of 50% of the repatriated export proceeds in the first instance, the balance of 50 % may be repatriated after 90 days from the date of inflow of the export proceeds.”
The CBN outlined documentation requirements to include: its approval for the repatriation of funds under the “Cash Pooling” transaction; a “Cash Pooling” agreement with the parent entity of the IOCs operating in Nigeria; Statement of Expenditure incurred in the period prior to the cash polling.
Wale Edun, Nigeria’s Minister Of Finance
Others are: Evidence of the source of foreign exchange inflow; and Completion of relevant forex form(s) as required under extant regulations.
The CBN directed all banks to inform their customers and comply with the regulation.
It said that it remained committed to the promotion of transparency in Nigerian FX market and would continue to develop policies to stabilize and deepen the market.
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