CBN Authorizes Banks to Give Loans in Dollars to Nigerians
The apex bank has authorized representatives of foreign banks in Nigeria to collaborate with their parent companies in providing and syndicating foreign currency-denominated loans (specifically, dollar loans) to Nigerian businesses, as per the guidelines. The move is expected to enhance dollar liquidity and alleviate foreign exchange pressure, according to The Nation.
Additionally, the CBN’s guidelines outline a range of activities that representatives of foreign banks in Nigeria are allowed to undertake, including marketing their parent company’s products and services, conducting research activities, acting as an intermediary between local banks, private institutions, and other customers in Nigeria and their foreign parent, and connecting banks and financial institutions with their parent company.
Moreover, they can assist Nigerian exporters with finding new markets through their international offices and provide information to Nigerian exporters about laws and markets in target countries where the parent company or any of its affiliates has a subsidiary. They can also organize seminars, forums, and other events in Nigeria that allow a foreign parent to meet with existing or potential customers in Nigeria, as well as collect and distribute financial and economic information or country reports to their foreign parent for use by the parent’s customers.
The CBN specifies that revenue earned by representative offices is acceptable as long as it does not originate from non-permissible activities and is linked to intra-group services given to the parent company, with such revenue taxed in compliance with transfer pricing regulations. The revenue in this context is limited to staff costs and business premises leasing fees, among other line items.
