Central Bank of Nigeria will be introduce new capital controls
The Central Bank of Nigeria (CBN) will be introducing new capital controls in the second quarter of the year to protect the foreign reserves and the naira, the Nation has learnt.
Nigeria suffered severe dollar shortages after the price of crude oil, its top export and main source of forex, plunged in late 2014, prompting it to introduce capital controls in 2015.
The country has multiple exchange rates against the dollar and has been selling the greenback on the interbank market to boost liquidity after floating the naira for investors.
But the policy, if implemented, will increase pressure on lenders already weighed down by bad loans.
The requirements will be stricter in terms of what funding qualifies as capital and will also require lenders to create “capital conservation” and “counter-cyclical” buffers, the CBN told Bloomberg.
The rule seeks to protect the nation’s banks “against shocks emanating locally and from abroad” by increasing the level of regulatory capital and the quality of the assets, it said.
Central Bank Nigeria said it will continue to welcome foreign investments and investors
Recently, the apex bank renewed its commitment to simplify foreign exchange regulations through reforms and innovation in a bid to further encourage investors.
It pointed out that the delegation of the issuance of Certificates of Capital Importation (CCIs) to commercial and merchant banks some years ago was done to instill confidence in the investor community and encourage the flow of foreign direct and portfolio investments into the Nigerian economy.
The bank noted: “We assure all investors that the integrity of the CCI regime remains sacrosanct and there shall be no retroactive application of foreign exchange rules and regulations. The CBN welcomes all legitimate investors to take advantage of the enormous investment opportunities in Nigeria.”
The CBN said it will continue to welcome foreign investments and investors.
“Indeed, some of our recent innovations and reforms of the foreign exchange regime, such as the introduction of the Nigerian Autonomous Foreign Exchange (NAFEX) window, are designed to simplify foreign exchange regulations,” the bank said.
With over $60 billion turnover in the Investors’ and Exporters’ (I&E) Forex Window launched by the CBN in April, 2017, has surpassed stakeholders’ expectation. The window is not only a boost to forex liquidity, but has stabilised the local currency at the official and parallel markets.