Nigeria’s apex bank, the Central Bank of Nigeria (CBN), has removed the requirement mandating international oil companies to retain a portion of their export proceeds in the domestic banking system.
In a circular dated March 25, the central bank confirmed it had scrapped the “cash pooling” policy that previously allowed authorised dealer banks to transfer only 50 percent of oil export proceeds immediately, while the remaining balance was held for up to 90 days.
Under the revised directive, oil companies are now permitted to repatriate the full value of their export earnings through authorised banks, subject to standard documentation and monthly reporting requirements. The new policy takes effect immediately.
The move is expected to enhance liquidity and improve confidence in Nigeria’s foreign exchange market, particularly among international oil companies that account for a significant share of dollar inflows into the economy.
The central bank said the decision aligns with its broader objective to “further liberalise and deepen the market in line with current market realities,” as authorities continue efforts to stabilise the naira and attract foreign investment.
Industry stakeholders noted that the removal of the retention requirement restores operational flexibility for oil producers, allowing them to manage cash flows more efficiently and deploy capital without regulatory delays.
Analysts added that improved access to export proceeds could reduce treasury constraints and marginally lower financial risks in Nigeria’s upstream sector.
The policy reversal follows the restriction introduced in February 2024, when the central bank imposed a 50 percent cap on immediate repatriation of oil export proceeds amid acute dollar shortages that pushed the naira to record lows.
At the time, the retained portion was held locally for up to 90 days to support liquidity in the foreign exchange market.
That measure formed part of a broader intervention framework deployed during a period of sustained foreign exchange pressure driven by declining oil revenues and disruptions linked to the COVID-19 pandemic.
Since then, the central bank has implemented a series of reforms aimed at restoring market stability. These include raising open market operation rates to attract portfolio inflows and removing caps on foreign exchange spreads in the interbank market as part of a gradual rollback of earlier controls.
While the latest directive signals continued progress toward a more flexible exchange rate regime, analysts cautioned that the policy may not immediately translate into a significant increase in dollar supply.
Instead, its primary impact is expected to be on investor sentiment and operational efficiency within the oil and gas sector.
The decision underscores the central bank’s evolving strategy to balance liquidity management with market-driven reforms as Nigeria seeks to strengthen foreign exchange inflows and rebuild confidence in its financial system.