CBN unveils new forex rules, tightens import, export regulations

There have been significant changes to the forex system in Nigeria with the recent issuance of the new Foreign Exchange Manual by the Central Bank of Nigeria (CBN).

The manual has set a number of measures and rules geared towards increasing oversight in the forex industry.

The newly issued guidelines have tightened the regulations on the handling of import transactions and export receipts. There will also be heavy penalties for non-compliance among other sanctions for offenders.

From the information obtained from the apex bank, the guidelines touch on the regulation of import transactions, exports and foreign receipt procedures as well as insurance and payments.

As per the guidelines, all transactions on imports must have a valid form ‘M’, with strict compliance on the timelines of submitting documentation on shipping and exchange control.

The documentation of the transactions is meant to verify its validity as part of the effort to stamp out the issue of trade-based money laundering in Nigeria.

The apex bank has also standardized the exchange rate for the import duty payments as the rates are calculated using the NFEM rate published every day by the CBN.

In an attempt to curb capital flight, the manual restricts advance payments for imports to a maximum of 30 percent of the value of transactions and sets the ceiling for trade finance interest rates at 0.5 percent over Secured Overnight Financing Rate (SOFR) with tenor not exceeding 180 days.

The manual is also strict on the exporter’s end in that all exporters will be forced to file form NXP irrespective of the value of their exports.

For goods sold abroad by non-oil exporters, they should make sure the export receipts are brought into Nigeria within 180 days while oil/gas exporters should ensure this within 90 days.

The manual also tightens the requirements for inspection of exports in that the exporters will be forced to carry out pre-shipment inspections and present Clean Certificate of Inspection to export goods.

Exporters will be subjected to the NESS levy that will take effect as from January 2022, at the rate of 0.5 percent on non-oil exporters and 0.12 percent on oil and gas exporters.

The manual also enhances monitoring of insurance transactions with regard to foreign exchange by prohibiting insurance of resident persons in foreign currencies.

The CBN said the new measures are aimed at enhancing discipline in the foreign exchange market, improving data accuracy on trade flows, and ensuring that export earnings are fully captured within the Nigerian financial system.

Analysts say the policy marks one of the most far-reaching reforms in Nigeria’s forex management in recent years, with significant implications for importers, exporters, banks and investors.