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Tag: NRNOA

  • CBN targets foreign investments, restrict local transactions in new diaspora accounts

    CBN targets foreign investments, restrict local transactions in new diaspora accounts

    The Central Bank of Nigeria (CBN) has announced restrictions on local transactions for the newly introduced Non-Resident Nigerian Ordinary Account (NRNOA) and Non-Resident Nigerian Investment Account (NRNIA), which are specifically intended for Nigerians residing abroad.

    In a circular issued on January 10, the CBN emphasised that deposits into these accounts “must originate from external sources through approved channels,” the circular, signed by Dr. W. J. Kanya, acting Director of the Trade and Exchange Department, said

    Read also: CBN speaks on exit of 1,000 staff, N50 billion severance plan

    “Local deposits are not allowed, except traceable profits from authorised local investments connected to previous foreign exchange transactions and inflows of foreign currency, such as selling FCY balances to authorised dealers.”

    “Transfers to other local accounts within Nigeria are allowed only in naira ” the statement adds.

    The restriction is a component of a larger structure designed to guarantee that the accounts fulfil their stated function of increasing investments and remittances from the diaspora.

    Goals of the NRNOA and NRNIA accounts

    The NRNOA is designed to allow Nigerians living abroad to manage their finances in Naira or foreign currency (FCY) and to send foreign earnings back to Nigeria, with examples of income sources including salaries, allowances, dividends, and rental income.

    Non-resident Nigerians (NRNs) are permitted to manage finances in naira or foreign currency (FCY) and send foreign earnings back to the country under the NRNOA. Salary, allowances, dividends, and rental income are a few examples of these incomes.

    Additionally, the NRNOA encourages local investment in healthcare, education, and family upkeep.

    The NRNIA, on the other hand, enables NRNs to invest in assets valued in naira or other currencies to promote diaspora investments in Nigeria.

    Domestic bonds, stocks, government securities, mortgage products, and the Diaspora Bond are among the acceptable investments.

    Read also: CBN orders immediate suspension of export proceeds repatriation extensions

    Freedom to diversify investment holdings

    The CBN emphasised that these accounts will provide NRNs more freedom to diversify their investment holdings and support the nation’s economic growth.

    The apex bank has established stringent rules for local transfers to guarantee adherence to this framework.

    Only naira may be transferred from these accounts to other local accounts in Nigeria; monies cannot be locally sourced unless they are connected to authorised investment proceeds.

    The CBN explained that this step is necessary to preserve the accounts’ integrity as instruments for diaspora investments and overseas remittances.

    Digital solutions

    To ensure seamless administration of these accounts, the CBN is promoting digital solutions that will support functions like issuing Bank Verification Numbers (BVNs) and facilitating remote Know-Your-Customer (KYC) updates in partnership with the Nigeria Inter-Bank Settlement System (NIBSS).

    These initiatives aim to enhance the accounts’ accessibility for Nigerians abroad.

    Eligibility criteria

    Eligibility for the NRNOA and NRNIA accounts requires proof of Nigerian identity and residency. This can include a valid Nigerian passport or a foreign passport with proof of Nigerian citizenship. U.S.-based investors must also adhere to the IRS FATCA standards.

    The CBN’s plan to maximise foreign investments in the Nigerian economy is reflected in the ban on local deposits.

    The CBN hopes to establish a clear and effective system that complies with international Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) standards by limiting the sources of funding for these accounts.

    Interest earned on these accounts will be subject to Nigerian tax regulations. A forthcoming FAQ document will clarify certain exemptions, such as those related to government bonds.

  • CBN launch financial offerings to attract Nigerians abroad

    CBN launch financial offerings to attract Nigerians abroad

    To attract Nigerian nationals living abroad, the Central Bank of Nigeria (CBN) has launched two new financial products: the Non-Resident Nigerian Ordinary Account (NRNOA) and the Non-Resident Nigerian Investment Account (NRNIA). In a statement released on Friday, the CBN emphasised that these accounts will enhance the ability of Non-Resident Nigerians (NRNs) to access opportunities within the Nigerian economy, while also enabling them to contribute to the nation’s socioeconomic growth.

    The CBN stated that these new accounts would provide Non Resident Nigerians (NRN) with a secure way to manage their funds independently, reducing their reliance on external intermediaries for local transactions.

    Read also: CBN orders immediate suspension of export proceeds repatriation extensions

    These accounts are available to qualified NRNs as of January 1, 2025, provided they fulfil the Know Your Customer (KYC) requirements outlined in a forthcoming release of Frequently Asked Questions (FAQs).

    NRNs to manage funds in local and foreign currencies 

    Non-resident Nigerians can manage monies in both local and foreign currencies and send their foreign earnings back to Nigeria through the NRNOA.

    However, the NRNIA allows them to invest in Nigerian assets in both local and foreign currencies. This flexibility allows account holders to maintain both naira and foreign currency accounts, streamlining transactions and maximising investment opportunities.

    Repatriation of funds

    Balances in the overseas account may be fully repatriated without restrictions and interest received on deposits will be subject to appropriate federal taxes.

    Through authorised dealers, funds can also be freely converted into naira at prevailing exchange rates.

    Capital mobility is made easy for the NRNIA by the 100 percent repatriation of investment principal and profits. This promotes better investment diversity by enabling account holders to easily invest in assets denominated in either local or international currencies.

    Read also: CBN speaks on exit of 1,000 staff, N50 billion severance plan

    Identification requirement

    When paired with a valid foreign passport or proof of domicile, Nigerian passports, whether valid or expired, may be accepted.

    As an alternative, a legitimate international passport proving one or both parents’ Nigerian citizenship may be presented.

    CBN’s engagements with Nigerians abroad to boost remittance flows 

    Major Nigerian banks, the Nigeria Inter-Bank Settlement System (NIBSS), and International Money Transfer Operators (IMTOs) formed a team led by the CBN in October 2024 to interact with the Nigerian Diaspora in Houston, Texas, in the United States.

    Muhammad Sani Abdullahi, the CBN’s Deputy Governor (Economic Policy), highlighted the objective of improving remittance flows and fortifying Nigeria’s financial system during the discussion with the theme “Optimising Remittances to Nigeria: A Vision for the Future.”

    According to the World Bank, remittances have contributed significantly to Nigeria’s fiscal inflows, averaging $20.5 billion per year over the previous ten years. But rather than being used for long-term investments that could spur economic growth, a sizable amount of these revenues are allocated to immediate consumption.

    By examining how remittances might be more effectively utilised for national development, the CBN and important financial stakeholders hope to change this strategy.