Two Years After, CBN, Analysts Count Gains of I & E Window


Obinna Chima

Exactly two years after the Nigerian Autonomous Foreign Exchange Fixing Mechanism (NAFEX), commonly known as the Investors’ &Exporters’ (I&E) window was introduced by the Central Bank of Nigeria (CBN), operators and the central bank have continued to hail the initiative.

The central bank had introduced the forex window as well as a raft of other measures to improve dollar liquidity on April 27, 2017, when the country faced a severe forex crisis.

The central bank had explained that the purpose of the window was to boost liquidity in the forex market and ensure timely execution and settlement for eligible transactions.

The cumulative transactions on the I&E window since the central bank created the market 24 months ago was put at $50 billion as at the end of March 2019.

The surge in inflows was attributed to offshore investors’ interest in Nigeria’s fixed income securities.

The apex bank had listed eligible transactions under the new window to include invisible transactions such as loan repayments, loan interest payments, dividends/income remittances, capital repatriation, management service and consultancy fees.

Also, on the eligible list were software subscription fees, technology transfer agreements, personal home remittances and any such other eligible transactions, including ‘miscellaneous payments’ as detailed under Memorandum 15 of the CBN Foreign Exchange Manual.

While explaining that the invisible transactions under this window excludes international airlines ticket sales’ remittances, the CBN had added that the window covers Bills of Collection and any other trade-related payment obligations, which are at the instance of the customer.

It is worthy of note that supply of forex to the window is through portfolio investors, exporters, authorised dealers and other parties with forex exchange to naira.

The CBN has been a market participant at the window to promote liquidity and professional market conduct.

Nigeria’s forex reserves stood at $43.170 billion as of last Friday, representing a marginal increase by $95 million, compared with the $43.075 million it was at the beginning of the year.

CBN Governor, Mr. Godwin Emefiele, a fortnight ago, while speaking at the recently held IMF/World Bank Spring Meetings in Washington DC, said the central bank took a number of policies to help to boost the supply of foreign exchange into the country during the forex crisis, describing the establishment of the I & E window as the most potent.

He said: “That window was introduced in April 2017 and it was a strategy to further liberalise the market. It was designed to increase transparency in the market because the market players at that time, particularly our friends-investor community – who had a lot of doubts about the level of transparency in the market.

“And we felt there is the need to establish a market where you will not find the hand of the CBN; people should be free to bring in foreign exchange into the country and take them out at will, but that the CBN, in line with the foreign exchange management policy, can only come in at some points to intervene, either by supplying dollars into the market or buying dollar from the market to keep the price at the level that we think is within acceptable thresholds.”

Emefiele stressed that the Nigerian economy is open to business and investors.

According to him, “We will continue to work tirelessly to boost the economy of the country. Notwithstanding the impact of the recession, Nigeria’s economy still remains the biggest in Africa. By the size of our Gross Domestic Product with a very well diversified economy across different sectors such as manufacturing, the central bank and the federal government are open to foreign investors.

“Investors should be assured that their investments in Nigeria will be duly protected by the authorities as they also have various advantages they can provide for our economy, human capital and technological know-how.

The Deputy Governor, Economic Policy, CBN, Dr. Joseph Nnanna, had described the window as a mighty success, saying it has performed beyond expectations.

On his part, the chief executive, Financial Derivatives Company Limited, Mr. Bismark Rewane, noted that the creation of the window was a good move, saying it has helped in attracting more investors and led the country closer to a perfect market.

To the Managing Director, Afrinvest West Africa Plc, Mr. Ike Chioke, the window has won the confidence of foreign investors.