By Yakubu LAAH InvestAdvocate
Lagos (INVESTADVOCATE)- The Central Bank of Nigeria (CBN) on Tuesday said it will enforce the repatriation of dollar-proceeds from exports and is planning sanctions on non compliant exporters. A Reuters report quoted Godwin Emefiele, governor of the CBN.
According to the report, Nigeria has been hit hard over the past year by a steep drop in oil prices and political uncertainty over a closely fought and delayed election.
The report says the turmoil has seen the naira lose more than 20 percent against the dollar since the middle of 2014, breaking through the important 200 per dollar level last month as it racked up the biggest monthly loss in more than five (5) years.
The CBN in February introduced trading rules under which banks will be able to purchase foreign exchange only if they have a prior order from a corporate customer, such as a fuel importer or foreign mobile phone company looking to repatriate profits or dividends.
The report quoted Emefiele as saying that now policy makers are looking at exporters to ensure hard currency liquidity within Nigeria, pondering sanctions against exporters who fail to repatriate proceeds and funnel them back into the official market within the stipulated 90-day limit.
“If you refuse to sell your export proceeds that you repatriate in the foreign exchange market … we will ban them from accessing foreign exchange in the Nigerian foreign exchange market,” Emefiele added.
The CBN governor affirmed that much of the pressure on the naira over the past year was due to activity of importers and exporters, the former frontloading purchases of hard currency while the latter were hoarding their overseas cash earnings.
The report said the huge gap which this has resulted on the currency markets has forced the CBN to intervene, which has led to a steep drop in Nigeria’s foreign cash reserves to four (4) to five (5) months’ worth of imports.
“Forcing exporting and importing companies to comply with existing regulations on their use of the currency market was now necessary. Another thing we will do is that we will ask the banks not to loan money to them (exporters who don’t repatriate hard cash on time),” he said, saying the measure would come into effect soon, but declining to give a date.
The CBN governor estimated that some $3-4 billion of proceeds due to be repatriated were outstanding, of which 40 percent would come from oil companies.
“We are saying … don’t put your foreign exchange in the hands of people who want to carry cash and take it abroad,” he said. “Use it to import tangible items that are documented,” he advised.
Emefiele further affirmed that the bi-weekly auctions in which the CBN sold foreign currency at a predetermined rate would not be reintroduced.
“(The window) is not closed. It is crushed and destroyed for life. Nothing is going to be opened again. We are not going to go back to a subsidised regime,” the CBN governor said.
