The Central Bank of Nigeria is always fighting moving targets. The latest is that the apex bank wants to bar exporters who do not repatriate their export proceeds from participating in Nigeria’s banking services. I am happy the CBN now understands the “voodoo” in the system where some companies exist to “export” exchange rate arbitration and make tons of money on it.
Nigerian exporters that have not repatriated export proceeds will be barred from all banking services from Jan. 31, the central bank said. The new directive applies to exports up until June last year, central bank spokesman, Osita Nwanisobi said by text message on Saturday. “Proceeds for oil is to be repatriated within 90 days and non-oil within 180 days.
The measures are part of an effort to defend the country’s currency by targeting importers and exporters with tougher regulations. That’s after a plunge in oil prices and the coronavirus pandemic led to dollar shortages in Africa’s largest crude producer resulting in a wide spread between the official exchange rate and the parallel market. The differential of about 25% has created an incentive for exporters to divert forex income to unofficial channels.
Yes, someone wants to “ship” money out of Nigeria to New York. He comes to you who exports palm oil from Umuahia to London; he credits you. The person paying you in London instead of wiring money to you in Lagos pays the person in New York. Magically, that New York company has moved money and the apex bank has no trace of it. Do that many times, the Naira remains beaten down.
Of course, companies are resorting to that because CBN gave them a really bad choice: The CBN expects exporters to sell their export proceeds through the I&E window. I&E window currently trades at N395/$1. No exporter will sell their foreign exchange at that rate when they can get willing buyers at N485 to N495.
So, most exporters have gone to open overseas accounts or alternatives, and CBN has lost control! Now, you see this letter (below)
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