Business & Economy - News - January 27, 2021

Why CBN insists export proceeds, diaspora remittances must come in foreign currency

With January 31, 2021 deadline for exporters to repatriate all proceeds from their transactions into the country in foreign currency just few days away, defaulters risk being blocked from further conducting business with any commercial bank in Nigeria, the Central Bank of Nigeria, Godwin Emefiele, has said.
The CBN governor said at the end of the first Monetary Policy Committee (MPC) meeting in Abuja on Tuesday that the apex bank would no longer tolerate the practice where exporters keep dollar proceeds from their transactions abroad and deny those wishing to use same to finance imports.
Mr Emefiele said apart from revenues from crude oil exports and support from foreign investors, export sector support and diaspora remittances are the other sources of revenues to fund government business.
With dwindling oil revenues, following a drastic drop in crude oil prices at the international market as a result of the impact of COVID-19, he said the time has come for the country to explore other sources of revenue away from crude oil.
New sources of government revenue
The CBN, he said, has resolved to pay more attention to diaspora remittances and export sector support as a major source of government revenue.
Consequently, he said, going forward, the CBN would give more incentive to export sector financing at concessionary rate, to encourage individuals and companies to generate export proceeds that would come handy to fund government obligations in the investors and exporters window.
“Since I became the CBN governor, I have been hearing about the size of diaspora remittances into the country. Some say it is between $20billion and $30billion per annum. I have been looking for that amount. I have not seen it.
“But, the CBN has decided to focus to see those billions of dollars. The CBN is not even expecting $20billion. If the CBN gets up to between $10billion and $15billion, it will go a long way to help the Nigerian economy recovery,” he said.
Citing the example of Pakistan, which generates an average of $2billion monthly in diaspora remittances, Mr Emefiele said such revenue has helped the country to reduce the impact of COVID-19 on its economy.
“If statistical records show the size of Nigerian diaspora remittances is $20billion, Nigerians deserves to know how that $20billion is utilized.
“That is why the CBN is insisting that all licensed IMTO (international money transfer operators) must ensure the proceeds of diaspora remittances must come into the country as foreign currency,” he said.
Such repatriated funds, the CBN governor said, must be only through deposit money banks and not either mortgage or FinTech institutions.
Penalty to defaulters
He warned against using any institution, other than money deposit banks, saying defaulters risk having those FinTech or mortgage institutions’ accounts closed by the banks on CBN’s instruction.
Apart from the closure of the defaulters’ account, the CBN governor said the banks would be ordered to block their BVNs (biometric verification numbers) to ensure they are unable to conduct any business transaction in Nigeria.
To help the apex bank keep records of all those involved in export transactions, the CBN said henceforth it is mandatory for all exporters to complete the Nigerian Export Proceeds (NXP) form, same as filling Form M when importing tangible items, and Form A for importation of intangible items.
Through NXP, he said the CBN would know those who have repatriated or those who have not repatriated proceeds into the country.
“The CBN will no longer tolerate any situation where people want to conduct export activities without filling NXP forms, or conducts export activities and keep dollars abroad. It is compulsory to fill NXP forms.
“We have held several engagements with the Nigerian Customs, and Shipping lines, and they have committed that no export would be done without completing NXP form, which is the only way we can regulate the volume of export activities in the country.
“We cannot continue to be calling on the CBN to request for the dollars for people conduct their import operations when there is a law that says that when an export activity is conducted, the dollar must be repatriated home for others who want to import to conduct their activities.
A reminder to operators
Last week, the CBN, through its Director of Trade and Exchange Department, OS Nnaji, insisted payments of all diaspora remittances to beneficiaries in Nigeria must be in dollars and not Naira.
In its official circular to all authorized dealers and international money transfer operators (IMTOs), the CBN warned defaulters of dire consequences, including being barred from accessing banking services in Nigeria against the continued contravention of its directives by operators.

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