The Central Bank of Nigeria (CBN) announced a suspension to the approval of extensions for the repatriation of export proceeds. This directive, issued via a circular dated January 8, 2025, applies to both oil and non-oil export transactions.
Exporters are required by Nigerian law to remit their proceeds from goods and services sold abroad to the Nigerian banking system, where they are then exchanged for local currency, the Naira.
In the past, exporters faced genuine challenges in repatriating their proceeds within the stipulated time frame would an extension from the CBN, with the approval of authorised dealer banks. The CBN’s decision to stop granting such extensions marks a sharp pivot from its previous stance of accommodating delays in repatriation.
Exporters often face a host of challenges when trying to repatriate foreign earnings, including delays in international banking systems, fluctuations in international shipping schedules, and sometimes even political or economic instability in the countries where they export goods.
The inability to secure an extension put many exporters in a difficult position, as they may now face penalties or restrictions for non-compliance with repatriation regulations. These penalties include fines or restrictions on future export activities.
The hope is that with exporters held to stricter deadlines, more foreign currency will flow into the country, reducing dependence on other sources of foreign exchange, such as loans or remittances.
While the immediate effects of the CBN’s policy change may seem harsh, it also signal a shift toward more stringent structural reforms aimed at improving the efficiency of the Nigerian economy. By enforcing strict timelines on repatriation, the CBN is aiming to address persistent concerns about the outflow of capital from the country, inefficiencies in the FX market, and the inadequate repatriation of export proceeds.
However, for the reforms to be effective, they must be accompanied by broader efforts to improve the ease of doing business in Nigeria, strengthen export infrastructure, and provide adequate support for exporters to navigate the challenges of international trade. Without such complementary measures, the policy could result in unintended consequences that undermine the very goals it seeks to achieve.
The Central Bank of Nigeria’s decision to suspend approvals for extensions of export proceeds repatriation carries significant weight for both exporters and the broader Nigerian economy.