The Central Bank of Nigeria (CBN) has released a new circular providing clear guidelines on the procedures and documentation required for the divestment and repatriation of foreign investments linked to the Certificate of Capital Importation (CCI). This move is aimed at ensuring strict compliance with foreign exchange regulations in Nigeria.
The circular, signed by Dr. W.J. Kanya, the Acting Director of the Trade & Exchange Department at CBN, underscores the necessity for specific documentation when engaging in transactions involving the repatriation of foreign investments. According to the circular, these requirements are in line with the provisions outlined in the Foreign Exchange Manual, particularly Memorandum 20, section 2(vi), which governs both divestments and CCI-related repatriation activities.
Key Documentation Required
To ensure proper adherence to these regulations, the CBN mandates that any divestment or repatriation of foreign investment, whether involving pre-liquidation or matured assets, must be supported by the following two key documents:
1. **Electronic Certificate of Capital Importation:** This certificate serves as proof that the original capital was imported into Nigeria and duly recorded. It is a critical document for verifying the legitimacy of the initial investment.
2. **Evidence of Redemption in Local Currency Assets:** This includes documentation that confirms the redemption of investments in local currency assets such as money market instruments, debt securities, and equities.
The CBN emphasized that these documents are essential for facilitating lawful and smooth foreign investment transactions within Nigeria.
Importance of Compliance
The CBN urged all stakeholders involved in these transactions to comply with the outlined requirements to avoid any potential regulatory violations. This reinforcement of existing rules aims to provide clarity and streamline the process of repatriating foreign investments, ensuring that all activities align with Nigeria’s foreign exchange laws.
Background Information
The CBN’s Foreign Exchange Manual, first introduced in 1995 and last revised in 2018, serves as a comprehensive guide for conducting foreign exchange transactions in Nigeria. The recent circular also follows previous CBN directives that limited International Oil Companies (IOCs) in Nigeria from repatriating 100% of their foreign exchange proceeds immediately. Instead, they are required to remit only 50% of their proceeds at once, with the remainder to be repatriated 90 days later.
Additionally, a report from the CBN noted a significant increase in foreign direct investors divesting from Nigeria, with asset disposals reaching $200 million in the third quarter of 2023. This trend highlights the growing movement of multinational corporations shifting their business activities out of Nigeria.
The new circular by the CBN is part of ongoing efforts to maintain stability in Nigeria’s foreign exchange market and ensure that all foreign investment transactions comply with the country’s regulatory framework.
