CBN Clarifies Instructions on Foreign Exchange Manual, Gives Order

• The CBN has reemphasised its foreign investment rules for requiring documentation for divestment and repatriation
• The released manual also provides clarification on the Certificate of Capital Importation and proof of local currency asset redemption
• The latest directive aims to ensure transparency and bolster confidence among foreign investors

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends

The Central Bank of Nigeria (CBN) has demanded transaction evidence for repatriation and divestment of foreign investments.

In a circular signed by W. J. Kanya, Acting Director of the Trade and Exchange Department, the CBN emphasised that the guidelines outlined in its foreign exchange manual, particularly Memorandum 20, Section 2 (vi), apply universally to all Certificate of Capital Importation (CCI) transactions.

Read also

NNPC sends message to FG on petrol imports as landing costs increases to new high

The CCI, a critical document issued by authorised dealers on behalf of the CBN, serves as proof of foreign direct capital investment in Nigeria, whether in the form of equity, debt, cash, or goods.

Details of CBN's new foreign exchange manual

The circular clarified that foreign investors seeking to divest must present specific documentation to their banks.

These documents include an electronic Certificate of Capital Importation and proof of redemption of investments in local currency assets, which cover money market instruments, debt securities, and equities.

The circular reads:

"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.

"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)

Read also

Hunger protest: Tinubu’s govt suspends sale of N40,000 rice to Nigerian workers, details emerge

"Please note and be guided accordingly."

Foreign investors repatriate over N300 billion

The directive arrives when foreign investors have been liquidating their portfolio investments in Nigeria at a significantly higher rate.

According to a report by the Nigerian Exchange (NGX) Limited titled "Domestic & Foreign Portfolio Investment," foreign investors liquidated N311.41 billion worth of portfolio investments in the first half of 2024, a sharp increase from N73.06 billion in the same period in 2023.

The Cable reports that this is in contrast; foreign investment inflows were reported at N229.07 billion for the first half of 2024, up from N72.02 billion in the corresponding period last year.

CBN instruction to international oil companies

Earlier, Legit.ng reported that the CBN had given the go-ahead for international oil companies to sell their 50% remaining repatriated export revenues.

This is an update from the earlier instruction by the CBN for IOCs to transfer 50% of profits from oil exports to offshore parent company accounts.

Read also

Workers at Nigeria’s 3rd biggest refinery announce date for protest, list demands

It stated that the 50% balance may also be sold to authorised dealers or eligible users of foreign exchange.

Source: Legit.ng