By Omodele Adigun
In its relentless efforts to boost liquidity in the foreign exchange (forex) market, the Central Bank of Nigeria(CBN) has amended its forex rule to accommodate portfolio investment by Nigerians who import hard currency through an authorized channel.
A circular by the acting Director of the apex bank in charge of Trade & Investment, W D Gotring , to all authorized dealers and general public on Friday, states that “In the continued effort to encourage portfolio investment in Nigeria, resident Nigerian nationals and/or companies who inflowed foreign currency through an authorised dealer are henceforth allowed to invest such funds in money market instruments, bonds and equities.”
And to accommodate this, the provision of Memorandum 21 of the foreign exchange manual has been amended. The new version now reads: “A resident/non-resident Nigerian national and/or entities and foreign national or entity may invest in Nigeria by way of purchase of money market instruments such as commercial papers, negotiable certificates of deposits, bankers acceptances, treasury bills, etc subject to the following documentation requirements.”
The requirements are as follows: “Tested SWIFT message evidencing the remittance of funds; Board resolution of the local beneficiary authorizing the investment ( in the case of a company); Purpose of capital importation specified in the SWIFT message and evidence of incorporation where applicable.”
The original provision entitled: “Purchase of money market instruments” had read: “A foreign national or entity may invest in Nigeria by way of purchase of money market instruments such as Commercial Papers, Negotiable Certificates of Deposits, and Bankers’ Acceptances, Treasury Bills, etc” The apex bank explains that only funds inflowed through authorized dealer by resident/non-resident Nigerian nationals and companies specifically for the purpose of investment shall be eligible for potfolio investment under the new regime.