IN the continued effort to encourage portfolio investment in Nigeria and attract more foreign exchange, the Central Bank of Nigeria (CBN), has disclosed that resident Nigerian nationals and/or companies who bring foreign currency into the country through an Authorized Dealer are henceforth allowed to invest such funds in money market instruments, bonds and equities.
This was stated in a latest circular to Authorized Dealers and the general public titled: ‘portfolio investment in Nigeria, amendment of memorandum 21 of the foreign exchange manual,’ and signed by the Assistant Director, Trade and Exchange Department of the CBN W.D Gotring.
Accordingly, the apex bank said the provision of Memorandum 21 of the Foreign Exchange Manual on the subject is hereby amended as follows: ”Any resident/non-resident Nigeria 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.”
This the CBN said, is subject to : 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; evidence of incorporation where applicable.
On procedure, the central bank noted in the circular that the prospective investor will appoint a local bank as an agent to purchase the instruments and the funds for the investment are transferred electronically to a designated bank.
“On receipt of the funds, the bank issues the investor with a Certificate of Capital Importation within 24 hours. Authorized Dealer shall keep separate records of the investment and render returns to CBN in format that will be advised from time to time; with the certificate, the investor through the bank or broker enters the market; invests in any instrument of his choice,” the circular read in part.
It further stated that if the investor wants to divest, he shall go to the bank with the Certificate of Capital Importation and evidence of redemption of money market instrument.
“For the avoidance of doubt, only funds inflowed through Authorized Dealer by resident/non-resident Nigerian nationals and companies specifically for purpose of investment shall be eligible. Consequently, balances on exports domiciliary and ordinary domiciliary accounts shall not be eligible for the investment,” the bank stated.