The Association of Bureaux De Change Operators of Nigeria (ABCON) has urged the Central Bank of Nigeria (CBN) to establish Offshore Asset Repatriation Window to allow more foreign capital inflows into the economy.
ABCON said this would cushion the effect of COVID-19 pandemic on the country’s foreign exchange earnings. ABCON President, Alhaji (Dr) Aminu Gwadabe made this known in a statement on Monday, saying the proposed policy plan will be a monetary instrument of the CBN backed by an Act of the National Assembly for non-disclosure of the sources or basis of proceeds of the funds to be repatriated.
He noted that there was need for tougher measures to keep the forex market and economy going by fiscal and monetary policy makers at this COVID-19 pandemic period.
“COVID-19 pandemic has led to drop in crude oil prices and drastic cut in Nigeria’s foreign exchange earnings. The proposed window will boost liquidity in the Bureaux De Change (BDCs) sub-sector, Investors’ and Exporters’ (I&E) forex window and help the CBN sustain stability of the exchange rate.
“The forex window which differs from the previous Voluntary Offshore Asset Regularisation 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 and to be traded at the prevailing rates in those windows.
“Besides, owners of such funds should have one year amnesty to participate in the market and should be liable to pay a reduced corporate income tax of 20 per cent”, he said.
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 the need arises.
ABCON reiterated that the window would boost foreign exchange liquidity and stem the volatility in the market, adding that it will also help in diversifying Nigeria’s foreign exchange earnings, as well as support national planning. Gwadabe added that, “the window will reduce 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 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.
“This will trigger other macro economic challenges.” such as high interest rate, low level of investors confidence, shrinking Diaspora remittances inflows and increasing livelihood agitations.
“There was need for both the monetary and fiscal authorities to act fast in ensuring that the impact of COVID-19 pandemic in the economy and businesses is reduced by attracting more foreign capital into the economy through the Voluntary Offshore Asset Repatriation Window which will benefit all players in the economy”.
He said the Nigerian economy outlook, when compared to global economic trends, does not look positive, hence the need to find a turning point or face dire consequences of inaction.