CBN has warned Banks to stop charging fees for forex purchases

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Nigerian law guarantees investors the unconditional transferability of proceeds of their investments in Nigeria in convertible currency, provided that inflow and repatriation are effected through Central Bank of Nigeria CBN authorised cbn forex guidelines - subject to cbn forex guidelines appropriate cbn forex guidelines requirements.

T here were, however, challenges with sourcing foreign exchange FX to make such repatriations in the recent past which has now eased.

Since Junewhen the CBN published new guidelines governing the operation of the Nigerian interbank FX market FX marketcertain cbn forex guidelines have been taken by the CBN — such as the establishment of special windows for sale of FX for invisibles school fees, medical fees, cbn forex guidelines allowance etcimportation of items by SMEs, etc and regular supply of FX by the CBN to these windows cbn forex guidelines that have helped to increase the availability of FX.

Operations in the window commenced on 24 th April. According to the CBN, the window was established to boost liquidity in the FX market and ensure timely execution and settlement for eligible transactions. This further liberalisation of the FX market means that investors can convert capital brought into Nigeria for investment into Naira at a market-determined exchange rate, since rates are no longer fixed by the CBN, as was the case in the past.

Rather, rates for Cbn forex guidelines transactions by participants in the window will be as agreed between counterparties - i. Bills for collection transactions and any other trade-related payment obligations at the instance of a customer are also permitted. Since the commencement of trading in the window, there appears to be sufficient liquidity as supply of FX is by portfolio cbn forex guidelines, exporters, banks and other parties with foreign currency to exchange to Naira.

The CBN will also participate in the window from time to time to promote liquidity and professional market conduct. Portfolio investors that have been unwilling to make investments in Nigeria may now do so and convert their capital at a near spot market determined rate. What does this mean for investors in Nigeria? The most significant effect of the cbn forex guidelines is that rates for FX transactions in the window will be as agreed between authorised dealers and their counterparties - i.

The CBN has neither set a band nor pegged a rate for transactions in the Window. Foreign investors that inflow foreign capital to make investments in Nigeria are now able to convert to Naira, in the window, at a rate agreed with the bank that is close to the actual spot market rate for the Naira and still be entitled to a certificate of capital importation CCI - the document that provides eligibility for access to the FX market when repatriation of profits or capital is contemplated.

Exporters are, also, now able to sell their export proceeds to banks at the window. The benefit for exporters is that the window creates a mechanism for which they are now able to agree a higher exchange rate with banks in connection with the purchase of export proceeds.

This would, potentially, have a positive effect on the earnings of investors in such companies. Nigerian corporates that have trade related transactions to fund have an option of accessing the window while they remain free to utilise the FX market.

Due to the liquidity constraint in the FX market — which is mainly funded by the CBN, if any corporate is unable to wait for the time that it will take to obtain FX in the FX market and is willing to pay a rate higher than what is available in the FX market, it could access the window to obtain FX to fund such trade transaction. In accessing the window, participants seeking to repatriate funds or make other payments are still required to submit the appropriate transaction supporting documentation prescribed by the CBN.

The window is only accessible for eligible transactions. Therefore, all the documentation requirements including, where applicable, certificates of capital importation or approval of the National Office for Technology Acquisition cbn forex guidelines Promotion for eligible transactions for the purchase of FX in the FX market continue to apply to transactions carried out in the window.

Finally, with the window, availability challenges have been greatly reduced for persons seeking to purchase FX for repatriation from the FX market in the immediate to short term. We have also seen increase in trading activities in the Nigerian capital market and growing interest of cbn forex guidelines institutions to make equity or debt investments in Nigeria.

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Less than 3 weeks to go! We will examine the Pension Fund Landscape in Afric…. DLA added law firms cbn forex guidelines Senegal and Tunisia…. Flexibility The most significant effect of the window is that rates for FX transactions in the window will be as agreed between authorised dealers cbn forex guidelines their counterparties - i.

Foreign Cbn forex guidelines Foreign investors that inflow foreign capital to make investments in Nigeria are now able to convert to Naira, in the cbn forex guidelines, at a rate agreed with the bank that is close to the actual spot market rate for the Naira and still be entitled to a certificate of capital importation CCI - the document that provides eligibility for access to the FX market when repatriation of profits cbn forex guidelines capital is contemplated.

Exporters Exporters are, also, now able to sell their export proceeds to banks at the window. Trade Related Transactions Nigerian corporates that have trade related transactions to fund have an option cbn forex guidelines accessing the window while they remain free to utilise the FX market.

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