CBN mandates proof of investment for foreign capital repatriation, divestment

The Central Bank of Nigeria (CBN) has issued a new directive requiring foreign investors to provide concrete evidence of their investment transactions before repatriating funds or divesting their holdings.

This move, aimed at enhancing transparency and accountability in Nigeria’s foreign investment sector, was announced in a circular signed by W. J. Kanya, acting director of the trade and exchange department.

The directive clarifies that under the Foreign Exchange Manual, Memorandum 20 section 2 (vi), all divestments and repatriation transactions involving Certificates of Capital Importation (CCI) must comply with specific documentation requirements.

Investors are required to present an electronic CCI, along with proof of redemption for investments in local currency assets, including money market instruments, debt securities, and equities.

This policy applies to both pre-liquidation and matured investments, reflecting the CBN’s commitment to tightening its oversight of foreign capital flows. By enforcing these documentation standards, the CBN aims to curb illicit financial activities and prevent capital flight from Nigeria.

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“This is to clarify that the Foreign Exchange Manual, Memorandum 20 section 2 (vi) applies to both divestments and repatriation of all Certificate of Capital Importation (CCI) related transactions,” CBN said.

“For the avoidance of doubt, every divestment or repatriation of foreign investment be it a pre-liquidation or matured investment, should present the following documents:

“a) Evidence of electronic Certificate of Capital Importation. b) Evidence of redemption of investment in local currency assets (money market instrument, debt securities, equities, etc.).”

This directive, which applies to both pre-liquidation and matured investments, is a clear indication of the CBN’s determination to strengthen its oversight of foreign capital inflows and outflows.

By demanding more stringent documentation, the apex bank hopes to curb illicit financial flows and prevent capital flight.