Nigeria - Foreign Exchange Controls Nigeria - Foreign Exchange
Nigeria operates a system of multiple exchange rates. These include, the official exchange rate from the CBN, an interbank rate (where banks lend to each other), another used by international money transfer companies, an Importers and Exporters (I&E) Window established in April 2017, and a black-market rate. The International Monetary Fund (IMF) has been critical noting that the absence of a single exchange rate creates confusion and deters foreign investments. In late 2015, the bank pegged the local currency at roughly 200 naira against the dollar until June 2016 when collapsing oil prices put pressure on the naira, forcing the bank to devalue it to about 305 naira to one U.S. dollar and introduce measures to save it from sliding further.
Some of these strategies include, barring importers of 42 product categories from accessing dollars from the CBN, restricting the amount of dollars drawn daily from foreign ATMs by Nigerians when they travel overseas, reducing dollar amounts the bank sold weekly to Bureau de Change operators, stopping sale of dollars to Nigerian students studying abroad and making the bank the exclusive conduit for all foreign capital inflows into the country. Though the CBN, boosted by a growing foreign reserve pot, has since relaxed some of these forex policies and injected the much-needed dollars into the system leading to relative stability in the market. Nevertheless, businesses still experience some difficulties buying foreign currency and processing offshore payments. The Nigerian House of Representative Committee on Banking and Currency scheduled a public hearing in July 2018 for the following; bill for an act to establish Factoring Assignments Act, bill for an act to amend the Currency Conversion (Freezing Orders) Act and bill for an act to repeal the Nigerian Industrial Development Bank (Guarantee) Act.
To encourage foreign investments in Nigeria, the government has, in theory, removed all barriers to repatriation of capital, profits and dividends. Repatriation of proceeds from disposal of assets is allowed. Subject to payment of relevant taxes, investors are guaranteed unrestricted return of their investment capital and proceeds, in any convertible currency, if that capital was brought into Nigeria under a Certificate of Capital Importation (CCI). However, for the reasons stated above, CBN’s effort to defend the naira has fettered the ease with which foreign monies can now be repatriated from Nigeria. Overall, U.S. companies are encouraged to consult their Nigerian bankers for proper advice with respect to foreign exchange dealings.