Nigeria’s foreign exchange market has long been shaped by uncertainty, limited liquidity, and growing pressure on the naira. Businesses struggled with restricted access to dollars, investors worried about policy inconsistency, and confidence in the official market weakened steadily over time. With the launch of a revised Foreign Exchange Manual, the Central Bank of Nigeria is now attempting to reposition the market through a more flexible and investor friendly framework.
One of the major highlights of the reform is the decision to grant extractive firms unrestricted access to 100 percent of their export proceeds. The policy, which takes effect from June 1, is expected to affect multinational companies operating in the oil, gas, and mining sectors. The CBN also removed cash pooling restrictions that previously complicated the movement of foreign exchange for international oil companies.
The reforms represent one of the strongest signals yet that the apex bank is moving toward a more liberalized foreign exchange system. For years, concerns over repatriation delays and limited access to export earnings discouraged foreign investors and weakened confidence in the official market.Bolanle Lawal, a banker, believes the new framework could encourage stronger participation from foreign investors if implementation remains consistent.
“Granting extractive firms unrestricted access to their export proceeds could improve confidence among foreign investors and encourage more inflows into the official market,” she said.
According to her, greater confidence in the system may gradually reduce pressure on the parallel market while improving liquidity within official channels.The revised manual also introduces broader operational changes designed to ease transactions for businesses. The CBN increased allowable advance payments for imports from 15 percent to 30 percent, giving import dependent businesses more flexibility in dealing with international suppliers. New provisions were also introduced for service exports, technology remittances, non resident investment accounts, and transactions under the Pan African Payment and Settlement System.
Another key adjustment is the removal of the mandatory Form A requirement for remittances through ordinary domiciliary accounts. The requirement had often been criticized for creating delays and bureaucratic bottlenecks in foreign exchange transactions.
Lawal noted that while the reforms may support naira stability, broader economic discipline remains important.
“The reforms may help, especially if they increase transparency and improve FX supply in the official market,” she explained.She added that inflation management, stronger oil earnings, and fiscal discipline would still play major roles in determining whether the reforms achieve long term stability. Economists say the reforms could improve Nigeria’s reputation among international investors, particularly at a time when many emerging markets are competing for foreign capital.
Philips Oluwashola, an economist, described the policy shift as a positive message to the global investment community.“The biggest benefit is that it sends a positive signal to foreign investors that Nigeria is becoming more market friendly,” he said.
According to him, investors are more likely to commit funds when they are confident that profits and export earnings can be accessed without major restrictions. However, Oluwashola warned that liberalization also comes with risks, especially if foreign exchange reserves remain under pressure.
“f Nigeria’s FX reserves remain weak, the economy could still face exchange rate pressure despite the liberalization measures introduced by the CBN,” he stated. He also stressed that foreign exchange reforms alone may not automatically attract large scale investment inflows.
“Investors also look at infrastructure, security, taxation, and policy stability,” he said, noting that broader structural reforms would still be necessary to strengthen Nigeria’s investment climate. Attention has also turned to how the reforms could affect inflation and import demand. By allowing businesses make higher advance payments for imports, the policy may improve access to raw materials and reduce supply chain disruptions for manufacturers and traders.Islamiyat Suliamon, an economist, said the adjustment could support productivity and business operations in the short term.“Increasing advance payments for imports gives businesses more flexibility when dealing with foreign suppliers, which can support production and reduce supply chain disruptions,” she explained.
At the same time, she cautioned that rising import demand could place additional pressure on foreign exchange demand and widen the trade deficit if not carefully managed.Suliamon further argued that monetary reforms alone would not be enough to stabilize the economy.
“No single monetary policy can stabilize the economy on its own,” she said.
According to her, Nigeria still faces deeper structural challenges, including weak export diversification, inflationary pressure, and low productivity levels. She emphasized the need for stronger coordination between fiscal and monetary authorities to achieve sustainable economic growth. The revised FX Manual signals a clear attempt by the CBN to improve transparency, attract investment, and restore confidence in the foreign exchange market. While the reforms may strengthen liquidity and improve market sentiment, their long term impact will depend heavily on policy consistency and broader economic reforms capable of addressing the country’s structural weaknesses.
