(Ecofin Agency) - The Central Bank of Nigeria says it will go tough on exporters over the non-repatriation of export revenues to strengthen the local currency.

Under this measure, exporters who will not repatriate the money they make from their activities within the next six days will simply be withdrawn from all banking services.

According to a notice relayed by Nairametrics, “the Central Bank of Nigeria (CBN) through its circular referenced TED/EXP/CON?NEX/01/001 dated 13th January 2021 has instructed that all exporters with unrepatriated export proceeds before 31st January 2021 should be barred from accessing all banking services.”

The measure is in line with Nigeria's existing legislation, which requires that all export earnings from Nigeria must be repatriated by companies within 90 days of receipt for the oil sector and 180 days for the non-oil sector.

With the economic crisis that has been hitting the country for several years, worsened in recent months by the covid-19 pandemic, Nigeria has seen its dollar reserves decline following the disruption of oil exports which account for at least 90% of its export revenues. In addition to plunging the national economy into recession, this situation has led to a depreciation of the local currency over the past year.

Because of the gap between the official exchange rate and the informal one, many Nigerian exporters had decided to store their dollar income in bank accounts abroad before trading it on the parallel market, where rates appear to be more appealing. This new CBN decision aims to strengthen the local currency by increasing the inflow of foreign currency into the official circuit, specifically the dollar.

When a company exports products, transactions are generally made in dollars. When these revenues are repatriated to Nigeria, they are converted into naira for use in the country. It is the Central Bank that repurchases these dollars to increase its foreign exchange reserves, thus improving the stability of its currency against the dollar.

Although it appears to serve noble intentions, many analysts fear that this measure may be counterproductive. Indeed, these new constraints could lead some actors to find other ways to avoid existing legislation, a situation that could further affect the Nigerian economy.

As a reminder, other measures had already been taken by the authorities to improve Nigeria's dollar reserves. In 2020, the country asked international money transfer operators to carry out their operations to transfer funds to Nigeria in dollars. According to Bloomberg, the new measures concern export operations carried out until June 2020.

In its report on the economic outlook for Sub-Saharan Africa published in October 2020, the International Monetary Fund (IMF) expects Nigeria's economic growth to be -4.3% for the past year, before recovering slightly to 1.7% this year.

Moutiou Adjibi Nourou