The Central Bank of Nigeria (CBN) has commenced the automation of the issuance of Certificate of Capital Importation (CCI) from issuance to repatriation in a renewed effort to align with international best practices and also improve service delivery and efficiency.
CCI is a certificate issued by a Nigerian bank confirming an inflow of foreign capital, either in the form of cash (loan or equity) or goods, and usually issued in the name of the investor within 24 to 48 hours of the inflow of the capital into Nigeria.
The primary purpose of the CCI is to guarantee access to the official foreign exchange market for repatriations of capital and returns on investment – dividend, interest, and capital on divestments.
Business Day gathered that CBN has issued instruction that all active CCIs should be migrated to an electronic based system, as physical CCIs will be phased out once this application goes-live.
Some lenders have given their customers up till the end of this month (November) for submission of necessary documents.
“In line with this directive, please submit the originals of all active CCIs to your branch or nearest branch on or before 28 November 2016 in order to help us capture and migrate your data to the new system,” an email from a tier two lender last week reads.
Ibraheem Babalola, investment research, Afrinvest, says the move is in the right direction, as it would improve the ease of doing business ranking for which Nigeria has been rated poorly.
“Whilst we believe the move by the Central Bank to automate the issuance of Certificate of Capital Importation is a step in the right direction, Nigeria (currently ranked 169th on the World Bank Ease of doing business Index), needs to do more regarding ease of doing business, the overwhelming challenges in the FX market, particularly the persistent liquidity crisis and perceived lack of transparency at the interbank market remain a bottleneck in the capital importation process.
“We expect that the lingering currency risk will continue to weigh on foreign investor sentiment in entering the Nigerian market, despite the attractive market valuation of financial securities and real assets.”
Boladeola Agbola, executive director, Cashcraft Asset Management limited, believes that the automation is long overdue but expresses doubt on its ability to solve the inherent challenges in the foreign exchange market.
“The introduction of electronic system of issuing Certificate of Capital Importation is a positive development and part of what needs to be done to ease the process of doing business in Nigeria.
“Since the capital or foreign currency importation comes through the CBN official window, the issuance of the certificate should be as easy as the receipt you are issued when you buy a commodity through POS because the intended use of the capital is part of importation documentation. What the CBN is doing is therefore not novel.
“It is however doubtful if the new system would significantly ameliorate the current foreign exchange crisis we are going through. Nigeria needs a truly transparent foreign exchange market that is subject to interplay of supply and demand .Our demand for goods and services is already adjusting to the reality of the dwindling fortunes of the country.”
Historically, CCIs have been issued in hard copy and for repatriation purposes, the hard copy of the CCI had to be marked down by the bank. This has led to a situation where investors are unable to make repatriations in the event that an original CCI had being lost or destroyed. The CBN has now decided to automate the process by migrating to electronic CCIs (e- CCIs). The e-CCI will be on a server that is maintained by the CBN.
The e-CCIs will make it easier to process transactions, ease the process of tracking transactions and make it easier to amend the CCI where an investor transfers investment in Nigeria to another investor.
The manual processing of the CCI had its drawbacks with recent allegations by the Senate Committee on Banks, Insurance and Other Financial Institutions of the transfer of $13.92 billion out of Nigeria by MTN and some Nigerian banks between 2006 and 2016.
