A Look At The Central Bank Of Nigeria's Operational Framework For Non-Resident Nigerian Ordinary Accounts And Non-Resident Nigerian Investment Accounts

INTRODUCTION

In a bid to enhance financial inclusion and facilitate greater engagement with Nigerians in diaspora,

the Central Bank of Nigeria (CBN) introduced a framework for the operation of Non-Resident Nigerian Ordinary Account (NRNOA) and Non-Resident Nigerian Investment Account (NRNIA), which took effect on the 1^st of January 2025.

These accounts are designed for Nigerians in diaspora, enabling them to manage their funds in a secure environment and contribute to Nigeria's socio-economic development. The framework aims to facilitate the management of funds, enabling Nigerians in diaspora to meet personal and investment obligations in Nigeria, without third-party involvement. This framework expands the provisions of Memorandum 17 of the Central Bank of Nigeria Foreign Exchange Manual 2018, which previously restricted account openings to specific categories. Memorandum 17 provides guidelines for operating External Accounts and Non-Resident Accounts for customers and organisations residing permanently outside Nigeria. Eligible entities include embassies, international organisations, and foreign companies executing contracts in Nigeria. However, the NRNOA and NRNIA now provide for Non-Resident Nigerians, enhancing their ability to directly participate in Nigeria's financial ecosystem.

OVERVIEW OF THE NON-RESIDENT NIGERIAN ACCOUNTS

Non-Resident Nigerian Ordinary Account (NRNOA): This account allows Non-Resident Nigerians (NRNs) to remit their foreign earnings, such as salaries, allowances, dividends, and rental income to Nigeria. NRNOA holders can manage funds in both foreign and local currencies, providing ease in financial transactions for personal expenses and other daily needs. Additionally, funds can be converted to Naira at prevailing exchange rates through authorised dealers¹. Interest earned on funds deposited in these accounts is subject to applicable Nigerian taxes.
Non-Resident Nigerian Investment Account (NRNIA): The NRNIA allows NRNs to invest in financial markets and instruments in Nigeria, either through foreign currency or Naira. It offers investment diversification by allowing NRNs to hold and trade assets in foreign currencies or Naira. Interest rates on balances from investments account are negotiable with the preferred bank.

KEY FEATURES AND PROVISIONS OF THE ACCOUNTS

Repatriation of Funds: Foreign currency balances in the NRNOA and NRNIA can be repatriated without restrictions. Local currency balances in the NRNIA are repatriable upon evidence of prior foreign inflows and related investment proceeds.
Local Transfers: Deposits into these accounts must originate from external sources through approved channels. Local deposits are prohibited unless they are traceable to approved local investments linked to prior foreign currency inflows.

Cash Withdrawal: Cash withdrawals from the accounts are subject to Nigeria's local rules and regulations.

Integration with Nigeria's Financial Markets: Account holders with the NRNIA are permitted to participate in both local and foreign currency-denominated financial instruments. Any investment made in Nigeria's equity and local debt markets must be made in Naira.

Compliance with International Standards: The framework is in line with the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) standards to mitigate risk and ensure transparency in fund flows.

Tax and Fiscal Policy: Investments made in the NRNIA are subject to applicable Nigerian tax laws.

Eligibility Criteria: To open either of the accounts, the applicant must furnish the relevant bank with a valid Nigerian passport or an expired Nigerian passport, provided it is accompanied by a valid foreign passport or residence permit/proof of residency. Alternatively, a valid foreign passport accompanied by evidence of Nigerian citizenship through either parent could also be provided.

Documentation Requirements: Applicants must provide documents such as utility bills in their name. NRNs based in the United States of America will be required to submit applicable Internal Revenue Service Foreign Account Tax Compliance Act forms (IRS FATCA). Additionally, proof of profession and source of income such as salary slips, bank statements, tax receipts (for salaried NRNs), or business registration documents (for self-employed individuals) will be required.

Digital Platform and Know Your Customer (KYC) Requirements: The CBN encourages banks to integrate with the Nigerian Inter-Bank Settling System-Non-Resident Bank Verification Number (NIBSS-NRBVN) platform to enable NRNs to acquire Bank Verification Numbers (BVN) for account opening purposes. Banks must also provide digital platforms that enable NRNs to update their KYC details effortlessly and ensure proper authentication.²

STRATEGIC BENEFITS AND ANTICIPATED IMPACT

The introduction of these accounts marks a significant step toward creating a more inclusive financial system. Designed to meet unique needs of NRNs, these accounts offer key benefits that support both NRNs and Nigeria's economy. The following points highlights the strategic benefits and anticipated impact of this framework:

Improved Financial Inclusion: By simplifying account opening processes and removing barriers to financial participation, the framework enhances financial inclusion for Nigerians abroad, allowing them to integrate more seamlessly into the nation's financial ecosystem. This represents a bold step toward fostering inclusivity and creating avenues for sustainable economic growth.
Increased Investment in Nigerian Markets: The NRNIA offers NRNs the ability to invest directly in Nigerian financial markets, thus channelling capital into local businesses, government bonds, and other financial instruments.

Global Standards and Transparency: The emphasis on compliance with AML/CFT regulations ensures that these accounts are relatively safe from illicit activities, which will make these accounts attractive to NRNs who prioritise transparency and regulatory compliance.
Enhanced Economic Growth: The framework is expected to attract foreign currency inflows, contributing to Nigeria's foreign exchange reserves and economic stability. NRNs can now remit funds more easily and invest directly in the Nigerian economy, supporting national development.

CONCLUSION

The introduction of this framework by the CBN demonstrates a forward-thinking approach to harnessing the funding potential of Nigerians in diaspora and enabling them to actively contribute to the nation's economic growth. By providing NRNs with secure, flexible, and efficient means to manage their finances and invest in Nigeria, the framework strengthens the financial ties of NRNs to Nigeria.

Footnotes

1. An authorised dealer refers to any bank licensed by the Central Bank of Nigeria to buy, sell and deal in foreign exchange transactions.

2. The KYC requirements will be made available in a Frequently Asked Questions (FAQ's) circular to be released in due course.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.