By Adedapo Adesanya
The Association of Bureaux de Change Operators of Nigeria (ABCON) has charged the Central Bank of Nigeria (CBN) to establish a voluntary offshore asset repatriation window to allow more foreign capital inflows into the economy.
In a statement by its president, Mr Aminu Gwadabe, the foreign exchange traders said the proposed policy plan would be a monetary instrument of the apex bank backed by an Act of the National Assembly for non-disclosure of the sources or basis of proceeds of the funds to be repatriated.
The ABCON boss also called for stricter measures by fiscal and monetary policy makers to keep the forex market and economy going due to the realities brought about by the COVID-19 pandemic.
He said the COVID-19 pandemic has led to drop in crude oil prices and drastic cut in Nigeria’s foreign exchange earnings and with this, more foreign capital will be pumped into the economy through the Voluntary Offshore Asset Repatriation Window which will benefit all players in the economy.
According to him, the proposed window will boost liquidity in the BDC sub-sector, Investors’ and Exporters’ (I&E) forex window and help the CBN sustain stability of the exchange rate.
According to Mr Gwadabe, the forex window, which differs from the previous Voluntary Offshore Asset Regularization Scheme backed by executive order 008 and tied to taxation, will be an incentive for owners of stashed funds abroad to be given an amnesty to repatriate their foreign cash holding into the window so it can then be traded at the prevailing rates in those windows.
Also, he advised owners of such funds to have one year amnesty to participate in the market which should be liable to paying a reduced corporate income tax of 20 percent.
Mr Gwadabe also advised that Naira proceeds from the transactions in that window should be invested in the economy for a maximum of 10 years before it can be allowed to be repatriated back, if and when the need arises.
According to the group, the window will also boost foreign exchange liquidity and help against the volatility of the market. He also said, it would help in diversifying Nigeria’s foreign exchange earnings, support national planning, enhance backward integration and import substitution policies.
Further, Mr Gwadabe said it will lead to reduction in the size of black and informal economy, boost sovereign credit ratings, improve living standards for the people and promote good corporate governance in institutions.
“Going by the dire consequences of COVID-19 on our economic indicators- decline in oil revenue, low tax to Gross Domestic Product (GDP) ratio, increasing budget deficit, declining fiscal buffers and debt servicing challenges, among others, poor revenue problem and falling oil prices despite OPEC oil supply cut and debt rescheduling.
“These will trigger other macro economic challenges such as high interest rate, low level of investors confidence, shrinking Diaspora remittance inflows and increasing livelihood agitations,” he said.
According to him, the Nigerian economy outlook, when compared with global economic trends, does not look positive, which is why the country needs to work with every available options or face dire consequences of inaction.
He said that the dwindling oil revenue was another wake up call to diversify the economy.
