The Central Bank of Nigeria (CBN) has removed the cash pooling requirement for International Oil Companies (IOCs), allowing them to fully repatriate their export proceeds through Authorised Dealer Banks (ADBs).
Previously in 2024, the apex bank required IOCs to repatriate export earnings into Nigeria, but only 50 per cent could be accessed immediately (via banks) while the other 50 per cent had to stay in Nigeria for 90 days before they could move it.
This was called a cash pooling requirement, designed to keep more foreign currency (like Dollars) inside Nigeria temporarily to support FX liquidity.
However, the apex bank, in a circular signed by the Director, Trade and Exchange Department, Mr Musa Nakorji, disclosed that, to further liberalise and deepen the market in line with current realities, IOCs are now granted unfettered access to their repatriated export proceeds.
“Accordingly, IOCs may repatriate 100 per cent of their export proceeds through ADBs, which are required to ensure proper documentation and submit monthly reports to the Director, Trade and Exchange Department.
“This provision supersedes all previous circulars issued by the Bank on cash pooling.
“All Authorised Dealer Banks are advised to note and comply accordingly, as this directive takes immediate effect.”
The development means more flexibility for foreign oil companies as they can now move their money freely and meet international obligations faster, while it reduces exposure to FX risks in Nigeria. This makes Nigeria more attractive to foreign investors, especially in the oil and gas sector, at a time when the global oil market is facing turbulence from the Middle East war triggered by the US and Israel against Iran.
This indicates that the apex bank is making do of its promise to shift towards a more market-driven FX system, where there are fewer controls and less forced retention of foreign currency. This could help boost investor confidence since they will have more control over their money flows.
However, this comes with potential risks as the country could see less short-term Dollar supply staying in the country and may invite pressure on the Naira if outflows exceed inflows.