12 September 2017

Nigeria: CBN Moves to Lure in More Foreign Capital

In an effort to further attract foreign capital into the country, the Central Bank of Nigeria (CBN) has begun issuing electronic certificates for capital imported into the country by improving its currency transfer process.

CBN in a circular signed by its director, Trade and Exchange Department, W.D. Gotring said the new certificate will replace a hard copy now issued when capital is imported. According to the apex bank, the move is targeted at enhancing transparency and efficient processing of foreign investment to the country.

Investors or companies are required by a 1995 law to get certificates within 24 hours declaring they have invested foreign currency in Nigeria. They must have the certificates to repatriate returns on those investments. Under the old rule, investors struggled to meet the one-day deadline to get the certificates, bankers say.

Nigeria grew out of recession in the second quarter as oil revenues rose, but the pace of growth was slow, suggesting a fragile recovery. Foreign investors fled the country when oil prices dropped three years ago.

They have started to return, thanks to improved transparency on exchange rates, and the central bank is trying to attract more investment. The country had recorded a 95.02 per cent in capital importation into the country as the value of capital imported into Nigeria in the second quarter of 2017 rose by $884.1 million to stand at $1.79 billion, according to data by the National Bureau of Statistics.

The National Bureau of Statistics (NBS) last week said the Nigeria's real Gross Domestic Product grew year-on-year by 0.55 per cent in the second quarter of 2017 to N16.31 trillion compared to a 0.52 per cent decline to N15.86 trillion registered in the preceding quarter.

The return to growth mainly resulted from improved foreign exchange supply in the economy as the country's oil income increased on reduced restiveness and sabotage of pipeline facilities in the Niger Delta coupled with increase in global crude oil prices

Meanwhile, the CBN yesterday intervened with another sum of $250 million. The bank said the latest intervention is part of its relentless effort to keep the inter-bank foreign exchange market liquid,

A breakdown of Monday's intervention indicates that the wholesale sector was offered the sum of $100 million, just as the Small and Medium Enterprises (SMEs) window received a boost of $80 million. Those requiring foreign exchange to address needs such as Business/Personal Travel Allowances, school tuition, medicals, etc. were allotted the total sum of $70 million.

The Bank's Acting Director in charge of Corporate Communications, Isaac Okorafor, who disclosed this, reiterated that the interventions had ensured stability in the market, even as he stressed that the CBN remained committed to maintaining transparency in the market.

According to Okorafor, the CBN has taken measures to check the activities of speculators and shield the currency from attacks, while also maintaining the international value of the Naira.

While assuring that authorized dealers had enough funds to meet the foreign exchange needs of customers, Okorafor urged all to adhere to the extant guidelines on the sale of forex in the Nigerian Forex market. He therefore advised those in genuine need of forex to continue to approach their respective banks for purchase. He said the Bank remained very optimistic that the Nigerian currency will fare strongly against other notable currencies around the world.

On the convergence target of the Bank between the forex rates at the inter-bank and the Bureau de Change (BDC), he said the goal would be attained if all stakeholders played by the rules.

The CBN last week assured customers of adequate foreign exchange in the market, dispelling fears of a scarcity of foreign exchange in the Nigerian forex market. Meanwhile, the naira exchanged at the Bureau de Change segment of the market on Monday, September 11, 2017, at the rate of N365/$1.

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