This one seems like a hail mary pass in America football by the Central Bank of Nigeria: banning transfer of forex (foreign exchange) from one bank customer to another, and the prohibition of forex cash lodgings into domiciliary accounts, by another person, who is not the account owner. As Sun noted, the motivation of this new mandate is to ascertain the utilisation of inflows into customers domiciliary accounts.
The circular states: “Forex inflows cannot be credited to customers until the legitimacy of funds is established.
“They can have unfettered access by telegraphic transfers up to a limit of $40,000 monthly for payment of medical bills, school fees, subscription to professional bodies subject to existing CBN guidelines.
“Transfers from one customer to another is prohibited. Transfer within related companies is allowed subject to a limit of $50,000 per month.”
It recommended that proceeds from non-oil exports should be sold to banks, used for repayment of dollar term loans, and self-utilisation for trade transactions for LC, bills and Form A. Also oil export proceeds from E&P companies are to be used to pay contractors and service providers employed by the oil companies in addition to the recommended uses for non-oil FX proceeds.
Largely, the apex bank has now understood what is happening: one of the best investments in Nigeria, since the beginning of 2020, was simply buying foreign currency and leaving it in your domiciliary account to gain value over the naira. We discussed this the other day in Tekedia Live.
Possibly, the apex bank has seen piles of value in domiciliary accounts of rich Nigerians even as those accounts are on HODL position as in the bitcoin world. Yes, you buy the US dollars, put them in the dorm account, with no intention to do any business with them, but wait for them to gain value on the naira.
As this passes, I hope one day we do not wake up with a CBN mandate that all monies in dorm accounts be converted into naira. Do not bet against that call!
Yet, it is all hail mary pass until Nigeria starts producing things. We are just building financial models but those have to be based on productive systems. By January, the U.S. government will send me another cheque for the rights to my patent which it licensed. Until we can get to that level of creating innovation, the central bank is simply doing dem go dey pose!---
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