By Emma Ujah, Abuja Bureau Chief
The gravity of the challenge of foreign exchange (FX) was laid bare when the Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso announced that the new leadership of the apex bank inherited a $7 billion FX backlog.
What that meant was that some individuals and businesses had provided Naira equivalent of the said amount of FX and were waiting for the CBN to provide them the dollar to enable them repatriate their money, transact whatever foreign business or make payments for whatever reason.
This is certainly not the best of times to be a CBN Governor as the pressure has been mounting on Mr. Cardoso from various quarters to provide FX for payment of goods and services abroad.
The scarcity of FX has led to an unprecedented crash in the value of the Naira, Nigerias legal tender.
From an average Exchange Rate of N460.702/$1 in May last year (when the present administration came into office) the Naira depreciated to between N1, 470 - N1, 800. last week.
The CBN Governor has used every opportunity to engage in the public to assure that his team was undertaking a series of reforms to raise the value of the Naira, by working to make more FX available to those who genuinely need it.
It is public knowledge that Mr. Cardoso has been guest at the National Assembly on many occasions and most often than not, the discussions have centered mainly on what he and his team are doing to address the FX challenge.
Cardoso reforms
CBN has indeed undertaken several reforms to address the FX scarcity. Some of the latest policy measures were the decision to stop International Oil Companies from repatriating 100 percent of their earnings from the country immediately after receiving such revenue, which comes in dollars.
Under the policy, the CBN directed International Oil Companies to henceforth repatriate 50 percent of their revenue to Nigeria.
Until now, IOCs paid their FX earnings 100 percent directly to their parent companies through what is called Subsidiary pools, without the Nigerian FX market benefitting from their export proceeds.
However, under the new policy, the CBN said IOCs will no longer be allowed to remit 100% of their forex proceeds to their parent company abroad as soon as they are earned.
Instead, they will be allowed to repatriate only 50% of such proceeds immediately, while the other 50% must be repatriated to Nigeria and the amount held for at least 90 days in Nigeria from the day of inflow before being allowed to be taken out of the country.
The apex bank therefore directed, banks to pool cash on behalf of IOCs, subject to a maximum of 50% of the repatriated export proceeds in the first instance, the balance of 50 % may be repatriated after 90 days from the date of inflow of the export proceeds.
The CBN outlined documentation requirements to include: its approval for the repatriation of funds under the Cash Pooling transaction; a Cash Pooling agreement with the parent entity of the IOCs operating in Nigeria; Statement of Expenditure incurred in the period prior to the cash polling.
Others are: Evidence of the source of foreign exchange inflow; and Completion of relevant forex form(s) as required under extant regulations.
The CBN directed all banks to inform their customers and comply with the regulation.
It said that it remained committed to the promotion of transparency in Nigerian FX market and would continue to develop policies to stabilize and deepen the market.
The apex bank also stopped the payment of Business Travelling Allowance (BAT) and Personal Travelling Allowance (PAT) in cash.
It equally reversed the Dollar-for-Dollar policy and directed that International Money Transfer Operators would no longer pay dollars for remittances from Diaspora Nigerians.
Instead, remittances payout would be in Nigeria,
On the BTA/PTA, the bank directed that all allowances are henceforth to be obtained in cards.
A circular issued by Hassan Mahmud, Director of Trade and Exchange, referenced:
TED/FEB/PUB/FPC/001/006 and titled, Allowable Channels for payout of Personal Travel Allowance and Business Travel Allowance stopped Cash for such allowances.
It said that the new measure was part of efforts towards making sure that only genuine travelers obtained BTA and PTA, going forward.
The circular read in part, Memorandum 8 of the Foreign Exchange Manual and the circular with reference: FMD/DIR/CIR/GEN/08/003 dated February 20, 2017stipulates the eligibility criteria for accessing Personal and Business Travel Allowances (PTA/BTA).
In line with the banks commitment to ensure transparency in the foreign exchange market and avoid foreign exchange malpractices.
All Authorized Dealer Banks shall henceforth effect payout of PTA/BTA through electronic channels only, including debit and cre
