The Association of Bureaux De Change Operators of Nigeria (ABCON) has advised the Central Bank of Nigeria (CBN) to establish a Voluntary Offshore Asset Repatriation Window to allow more foreign capital inflows into the economy.
ABCON President, Alhaji Aminu Gwadabe, who disclosed this yesterday, said the proposed policy measure would 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.
The ABCON boss said there was need for tougher measures to keep the forex market and economy going by the fiscal and monetary authorities at this challenging time triggered by the COVID-19 pandemic. According to him, the proposed window will boost liquidity in the Bureaux De Change (BDC) sub-sector, Investors’ and Exporters’ (I&E) forex window and help the CBN sustain stability of the exchange rate.
Gwadabe explained that the proposed 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 and to be traded at the prevailing rates in those windows. In addition, he canvassed that owners of such funds should be given one year amnesty to participate in the market and should be liable to pay a reduced corporate income tax of 20 per cent. 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.
According to him, the window will boost foreign exchange liquidity and stem the volatility in the market. It will also help in diversifying Nigeria’s foreign exchange earnings, support national planning, enhance backward integration and import substitution policies, 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.
He said: “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 macroeconomic challenges such as high interest rate, low level of investors’ confidence, shrinking Diaspora remittances inflows and increasing livelihood agitations”, the ABCON President stressed.