CBN mandates banks to allocate 60% forex sale to manufacturers

The Central Bank of Nigeria (CBN) says all forex dealers – most of whom are deposit money banks –should begin allocation of 60 percent of their transacted foreign exchange to manufacturers.

CBN said it had noted that negligible amount of forex sold to end users actually get to the manufacturers.

In a circular addressing this, signed by W.D Gotring, acting director of the CBN trade and exchange department, the bank said only 40 percent of transacted forexes should go outside the manufacturing sector.

“Following the review of returns on the disbursement of foreign exchange to end users, it has been observed that negligible proportion of foreign exchange sales are being channelled towards the importation of raw materials for the manufacturing sector,” the circular stated.

“Against this background and in order to address the observed imbalance, authorised dealers are hereby directed to henceforth dedicate at least 60% of their total foreign exchange purchases from all sources (interbank inclusive) to end users strictly for the purpose of importation of raw materials, plant and machinery.

“The balance of 40% should be used to meet other trade obligations, visible and invisible transactions.”

The bank apex said authorised dealers should continue to publish weekly sales of foreign exchange to end users in national newspapers.

The CBN’s prohibition of forex sales to manufacturers importing 41 specific items listed by the bank still stands, as the bank has not lifted the prohibition.