The Central Bank of Nigeria (CBN) has ordered banks to allocate 60 per cent of their total Foreign Exchange (Forex) purchases from all sources (interbank inclusive) to manufacturers and 40 per cent to other users for the purpose of trade and other obligations.
The CBN, in a circular titled “Foreign exchange sales to end users” signed by Acting Director, Trade and Exchange Department, W.D. Gotring said:
“Following the review of the returns on the disbursement of foreign exchange to end users, it has been observed that negligible proportion of foreign exchange sales are being channelled towards the importation of raw materials for the manufacturing sector
“Against this background and in order to address the observed imbalance, the Authorised Dealers are hereby directed to henceforth dedicate at least 60 per cent of their total foreign exchange purchases from all sources (interbank inclusive) to end users strictly for the purposes of importation of raw materials, plant and machinery. The balance of 40 per cent should be used to meet trade obligations, visible and invisible transactions.”
Gotring, further stated that the Authorised Dealers should continue to publish weekly sales of foreign exchange to end users in the national newspapers and to render statutory returns on same to the CBN promptly.
In another circular titled Re: Transactions in “free funds” by authorised dealers, the apex bank stated that it has noticed that some Authorised Dealers have continued to buy and sell foreign exchange referred to as “free funds” despite the provision of the circular referenced TED/ AD/29/2004 dated March 4, 2004 on the subject.
To this end, the Gotring said “Against the background, Authorised Dealers are to note that dealing in foreign exchange without appropriate documentation which includes relevant entries, blotters, physical documents and non-disclosure to the Regulatory Authorities is a breach of extant regulations.”