The Central Bank of Nigeria (CBN) has implemented new regulations preventing international oil companies from transferring 100% of their foreign exchange proceeds to their parent companies overseas in a single transaction. Instead, the apex bank has directed that these companies can initially repatriate 50% of their proceeds, with the remaining half available for repatriation after a 90-day period.
Hassan Mahmud, the Director of the Trade and Exchange Department at the CBN, disclosed this information in a circular dated February 14, 2024.
The CBN expressed concern over the practice where proceeds from crude oil exports by International Oil Companies (IOCs) operating in Nigeria are transferred offshore to fund parent accounts, a process known as “cash pooling.” According to the apex bank, this practice has adverse effects on liquidity in the domestic foreign exchange market.
To address this issue and align with ongoing reforms in the foreign exchange market, the CBN has issued the following directives:
- Banks are permitted to pool cash on behalf of IOCs, limited to a maximum of 50% of the repatriated export proceeds in the initial transaction.
- The remaining 50% may be repatriated after a 90-day period from the date of inflow of the export proceeds.
