Foreign Exchange Regulatory Update In Nigeria; Guidelines For The Implementation Of The Non-Oil Export Rebate Scheme

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On February 25, 2022, the Central Bank of Nigeria ("CBN") released the Operating Guidelines for the RT200 Non-Oil Export Proceeds Repatriation Rebate Scheme (the "Scheme").
Nigeria International Law
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Introduction

On February 25, 2022, the Central Bank of Nigeria ("CBN") released the Operating Guidelines for the RT200 Non-Oil Export Proceeds Repatriation Rebate Scheme (the "Scheme"). The Scheme was initiated in furtherance of the CBN's Race to $200billion FX Repatriation Programme (RT200 FX Programme), an initiative which involves the implementation of policies and programmes geared towards raising $200 billion in foreign exchange from non-oil proceeds exported from Nigeria, within the next 3-5 years. The objective of the Scheme among others, is to ensure the stability and sustainability of foreign exchange inflows in Nigeria.

Today's newsletter briefly highlights the incentives available under the Scheme, the eligibility criteria for accessing the incentives and the application procedure.

What incentives are available under the Scheme?

The Scheme provides for the payment of:

a. N65 (sixty-five naira) to eligible non-oil exporters ("Eligible Exporters") for every US$1 (one United States Dollar) repatriated by the exporters into Nigeria and sold at the Investors' & Exporters' Window ("I&E Window") to authorized dealer banks ("ADB") for use by third parties; and

b. N35 (thirty-five naira) to Eligible Exporters for every US$1 (one United States Dollar) repatriated and sold at the I&E Window to ADBs for use by the Eligible Exporter.

Who can Benefit from the Scheme?

Exporters of Non-oil products and services will be eligible to benefit from the incentives under the Scheme ("Incentives"), where they fulfil the criteria listed below:

a. Investment in eligible transactions- Exporters of non-oil goods and services ("Applicants") will be deemed eligible for the Incentives on a transactional basis. To qualify for the Incentives, the Applicant is required to have exported finished and semi-finished goods wholly or partly processed or manufactured in Nigeria; or exported goods and services (IT and creative business-related) that are permissible and excluded from the export prohibition list. It is noteworthy that despite the fact the CBN has begun making payments to Eligible Exporters, it is yet to proffer any clarification on businesses deemed as creative businesses;

b. Registration with regulatory agencies- the applicant is required to be registered with the Corporate Affairs Commission (CAC) as a company and the Nigerian Export Promotion Council (NEPC).

c. Repatriation and sale of proceeds of eligible transactions at the I&E Window- The Applicant is required to repatriate the proceeds of the eligible transactions (as highlighted in a above) and sell the foreign currency to an ADB at the I&E Window1.

How to apply for the Incentives

The application process for obtaining the Incentives is detailed below.

a. Submission of a written application to an ADB

To request for the Incentives, the Applicant is required to submit a written application to the ADB that registered its Form NXP2, in addition to the following documents:

  1. a completed application form;
  2. documentation required for exports (such as the NXP Form) as provided for in the Foreign Exchange Manual, 2018;
  3. evidence of repatriation and sale of export proceeds at the I&E Window; and
  4. Any other documents required by the CBN

b. Processing of the Application by the ADB

Upon submission of the documents by the Applicant to its ADB, the ADB is required to confirm the completeness of the documents submitted and the eligibility of the Applicant. Upon confirmation, the ADB will be required to forward such application to the CBN (Director, Trade & Exchange Department) within 5 working days from the completion of the sale of the Applicant's export proceeds at the I&E Window.

c. Approval by the CBN

Upon approval by the CBN, the operating guidelines provide that payment of the Incentive to the Eligible Participants will be made at least one week after the end of the quarter.

Conclusion

It is interesting to note that while the Scheme is similar to the CBN's Naira4Dollar which was also initiated to improve the inflow of foreign currency into the Country, they differ to the extent that the Scheme is geared towards non-oil exports while the Naira 4 Dollar scheme is applicable to recipients of diaspora remittances.

Overall, the Scheme is aimed at promoting the exportation of non-oil goods and the inflow of foreign currency in Nigeria, as the cumulative exchange rate under the Scheme will reduce the margin between the I&E Window and parallel market rates. Although the Scheme is laudable, it will be interesting to see how the Scheme fairs in view of the ever-rising parallel market rates.

Footnotes 

1 It is important to note the Foreign Exchange manual, 2018 requires all exporters to repatriate and credit the proceeds of export to their export domiciliary account with a Nigerian bank within 180 days from the date on the Bill of Lading.

2 Form NXP is simply the Nigerian Exports Proceeds Form. It is a mandatory document required to be completed by persons intending to export goods out of Nigeria through an ADB

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.

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