CBN goes tough on exporters over forex non-repatriation

As part of its effort to increase foreign exchange liquidity in the country, the
Central Bank of Nigeria (CBN) has directed all banks in the country to submit the
names, addresses and Bank Verification Numbers (BVN) of exporters that have
defaulted in repatriating their exports proceeds, for further action.
The directive issued by the CBN Governor, Mr. Godwin Emefiele, on Tuesday, August
25, 2020, during the Bi-monthly virtual meeting of the Bankers’ Committee, comes
barely 24 hours after the Bank announced the abolition of third-party “Form M”
payment.

The move by the CBN followed the adoption of the strategy to discourage over-
invoicing, which some businesses have allegedly used to divert foreign exchange from
the country, through the opening of “Forms M” for which payment are routed through a
buying company, agent, or other third parties.

The statement signed by the Bank’s Director of Trade and Exchange, Dr. Ozoemena
Nnaji, had also explained that the directive was aimed at ensuring prudent use of
Nigeria’s foreign exchange resources and the elimination of incidences of over-invoicing,
transfer pricing, double handling charges and avoidable costs that are ultimately passed
to the average Nigerian consumer.

It will be recalled that the CBN, in the past, had also warned exporters conducting
export activity against diverting foreign exchange from the export proceeds, instead of
repatriating same home.

The Bank, in collaboration with the Bankers’ Committee, had threatened heavy
sanctions against exporters who failed to repatriate foreign exchange proceeds from
their international business. The CBN stressed that its Foreign Exchange Manual
provided that all exporters should repatriate export proceeds back to the country to
support the local currency and boost the economy.

Meanwhile, analysts say that a number of punitive options are open to the CBN,
including, but not limited to, barring the exporters from the foreign exchange market
and other banking services.