Faith Nyasuguta
Nigeria has moved to ease pressure on its foreign exchange market, with the central bank lifting restrictions that previously forced international oil companies to hold back a portion of their export earnings. The policy shift now allows firms to repatriate 100% of their proceeds, marking a significant step toward restoring investor confidence and improving dollar liquidity.
The restriction, introduced in February 2024 at the height of a severe dollar shortage, had limited companies to transferring just half of their export revenues immediately. The remaining 50% was required to stay within the country for up to 90 days, as authorities scrambled to stabilise the naira amid record lows.
In a new directive issued on March 25, the central bank confirmed it had eliminated the “cash pooling” rule, effectively removing the waiting period and granting oil firms full access to their earnings. Under the revised framework, companies can now move all export proceeds through authorised banks without delay, provided they meet documentation requirements and comply with monthly reporting obligations.
The move signals a broader shift toward liberalising Nigeria’s foreign exchange regime, particularly in the oil sector, which remains the country’s largest source of dollar inflows. Policymakers are betting that easing restrictions will encourage greater inflows, rebuild trust among investors, and create a more transparent and efficient currency market.
However, analysts caution that the immediate impact may be gradual. While the policy improves access and flexibility for oil companies, it does not automatically guarantee a surge in dollar supply. Broader market dynamics, including global oil prices and investor sentiment, will continue to shape outcomes.
For international oil firms, the decision restores greater control over cash flow management. Without mandatory holding periods, companies can now decide when and how to deploy their revenues, improving financial planning and reducing exposure to currency risk.
Industry insiders say the reform could also enhance Nigeria’s attractiveness as an investment destination, particularly in the upstream sector where capital mobility is a critical concern. By removing constraints on profit repatriation, authorities are sending a clear signal that they are committed to creating a more business-friendly environment.
As Nigeria continues to navigate currency volatility and economic reform, the policy change reflects a strategic balancing act – loosening controls to attract capital while working to stabilise the naira in an increasingly uncertain global market.
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