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.
Capital control allows the apex bank to put up
measures that check inflow and exit of funds from
foreign portfolio investors in the economy.
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.
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.â€
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.
Source: thenationonlineng.net/cbn-plans-new-capital-control-rules/
