November 7, 2024/CSL Research
On 31 October 2024, Mr. Wale Edun, the Honourable Minister of Finance and Coordinating Minister of the Economy, announced the launch of the Foreign Currency Voluntary Disclosure, Depositing, Repatriation, and Investment Scheme, also known as the Disclosure Scheme. This initiative is in line with Executive Order No. 15 of 2023, titled the “Disclosure, Depositing, Repatriation, and Investment of Eligible Foreign Exchange Assets and Related Matters Order, 2023.” The guidelines for this scheme, issued by the Minister on 25 October 2024, are outlined in the “Foreign Currency Disclosure, Deposit, Repatriation, and Investment Scheme Guidelines, 2024.”
According to the federal government, the Disclosure Scheme currently has a 9-month window which allows for the voluntary disclosure, depositing, repatriation, and investment of internationally tradable foreign currencies (ITFCs) held by Nigerians, both within and outside the country. The key objectives of the Disclosure Scheme are to 1) Enhance financial transparency, 2) Facilitate voluntary disclosure, 3) Enable depositing and repatriation, 4) Promote investment in permissible sectors and permissible investment instruments, 5) Bolster Anti-Money Laundering (AML) and Counter the Financing of Terrorism (CFT) capabilities, and 6) Boost economic resilience and development.
The government is offering several incentives to encourage participation in the Disclosure
Scheme:
1. Asset Protection: Assets disclosed, deposited, repatriated, or invested under the
scheme will be safeguarded from expropriation, seizure, or forfeiture.
2. Tax Immunity: Participants will be exempt from tax audits, investigations, or
liabilities on the disclosed foreign currency amounts.
3. Interest Earnings: Any interest earned on balances within the designated
domiciliary sub-account will be tax-free.
4. Unrestricted Repatriation: Participants are free to repatriate their foreign currency,
along with any proceeds or accretions, at the prevailing exchange rate, in
accordance with the scheme’s guidelines.
5. Confidentiality: All disclosed information will be treated with strict confidentiality.
These incentives aim to make the scheme attractive and secure for participants.
On November 5, 2024, the Central Bank of Nigeria (CBN) issued a circular to all Commercial, Merchant, and Non-Interest Banks (CMNIBs) detailing guidelines for implementing the Disclosure Scheme and clarifying regulatory expectations for CMNIBs participating in the program. Notably, the guidelines permit CMNIBs to trade with any deposited foreign currency not immediately invested by a participant, as long as the funds remain accessible to the participant when needed. This provision is expected to positively impact CMNIBs, enhancing trading income in their financial statements. The Foreign Currency Voluntary Disclosure, Depositing, Repatriation, and Investment Scheme is a timely initiative anticipated to help curb the dollarization of the domestic economy. It aims to strengthen Nigeria’s FX reserves by increasing the volume of repatriated funds, enhance FX liquidity within the formal financial system, and, ultimately, reduce the ongoing depreciation of the Naira.
