CBN warns that Nigeria faces a dollar shortage as shippers and airlines refuse to hand in foreign exchange

CENTRAL Bank of Nigeria (CBN) officials have warned that the country could face a severe foreign exchange shortage over the coming months as shipping and airline companies are not remitting the dollars they have earned from their overseas operations.

Due to the coronavirus pandemic, the Nigerian economy has been hit hard as the lockdown has not only led to massive collapse in crude oil demand but it has also depleted prices. With over 90% of government revenue coming from the sale of crude oil, the CBN is dependent on the proceeds of petroleum sales to provide foreign exchange to private importers and the government.

As a result of limited revenue, the CBN has been unable to meet demand and as a result the backlog keeps growing, rising from $1bn in May to $2bn this week. Now, the crisis looks set to get worse with shipping lines are airlines refusing to let go of their hard currency, precipitating a chronic shortage.

Under Nigeria's fiscal laws, the CBN’s foreign exchange manual mandates all exporters to repatriate export proceeds to the country to increase foreign exchange liquidity, support the naira and lift the economy. Since the coronavirus crisis, the CBN has been monitoring non-oil exporters, especially airlines and shipping firms and assessing their compliance with the export proceeds repatriation policy.

In a circular to authorised dealers, the Nigerian Custom Service, Nigerian Shippers Council and other stakeholders, the director of the CBN's trade and exchange department, Mr OS Nnaji, said the bank had observed with dismay, the non-compliance by shipping and airline companies to its directive. He directed that henceforth, it shall be a breach of extant regulations for any shipping or airline company to take on-board any cargo for which a Nigeria Export Proceeds form is not duly completed and approved on the Trade Monitoring System platform.

Mr Nnaji warned that those that breach the guidelines will face severe sanctions which shall include refund of the forex value of goods legally exported as well as post-no-debit on all bank accounts nationwide. In addition, the CBN also directed all Nigerian banks to submit the names, addresses and bank verification numbers of exporters that have defaulted in repatriating their exports proceeds, for further action.

CBN governor Godwin Emefiele said that the apex bank was ready to encourage the revamp of Nigeria’s export sector through deliberate policies that would boost investment and job creation. According to the CBN manual, proceeds of exports are to be repatriated into the export proceeds domiciliary accounts of their exporters’ accounts within 90 days for oil exports and 180 days for non-oil exports.