CBN tightens export repatriation rules to bolster forex reserves

The Central Bank of Nigeria (CBN) has announced a policy shift to strengthen compliance with foreign exchange regulations by suspending approvals for extensions of export proceeds repatriation.

The directive, dated January 8, 2025, and signed by Dr. W.J. Kanya, Acting Director of the Trade & Exchange Department, applies to both oil and non-oil export transactions.

The circular titled “Suspension of Extension of Export Proceeds on Behalf of Exporters” emphasizes compliance with the Foreign Exchange Manual (Revised Edition, March 2018).

It specifies: Non-Negotiable Timelines: Non-oil export proceeds must be repatriated within 180 days of the bill of lading date.

Oil and gas export proceeds must be repatriated within 90 days.

No More Extensions: Effective immediately, the CBN will not approve requests from authorized dealer banks to extend these timelines.

Strict Penalties for Non-Compliance: Authorized dealer banks are responsible for ensuring their customers adhere to these guidelines, with penalties for violations.

The policy is part of broader efforts to stabilize the naira, improve liquidity in the foreign exchange market, and curb delays in repatriation.

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Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), commended the CBN’s decision as a necessary move to address forex scarcity but warned of potential challenges.

“This policy will strengthen forex inflows, but it places significant pressure on exporters. Businesses with long payment cycles may struggle to meet the strict timelines,” Yusuf said.

Energy economist Boma Ajayi noted that the policy could pose operational challenges for international oil companies (IOCs).

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“While the rules aim to ensure forex liquidity, the oil sector operates on complex cash flow cycles. The 90-day timeline might disrupt their financial planning,” Ajayi explained.

Financial analyst Bola Akinyemi highlighted the policy’s potential to improve transparency.

“The removal of extensions will compel exporters to adhere to timelines, reducing the loopholes previously exploited for speculative practices,” Akinyemi stated.

This move aligns with earlier measures taken by the CBN, including: Restricting IOCs from remitting 100% of their forex proceeds immediately to parent companies, requiring 50% to be retained in Nigeria for 90 days.

Mandating pre-approval from the CBN for cash pooling arrangements by IOCs.

Allowing IOCs to utilize repatriated proceeds for domestic obligations and sell excess funds to authorized forex dealers.

Exporters are concerned about the operational impact of the policy. “The new guidelines add urgency to our operations, but flexibility is critical in international trade,” said a representative of the Nigerian Export Promotion Council (NEPC).

The CBN reiterated its commitment to ensuring timely repatriation of export proceeds to support Nigeria’s foreign exchange reserves. Industry stakeholders are now adapting to the stricter guidelines as they await further clarifications on implementation.

Economists warn that while the policy is a step toward forex stability, its success hinges on addressing systemic bottlenecks that affect exporters, such as infrastructural deficits and port inefficiencies.