Introduction

Nigeria’s foreign exchange policy raised concerns in the business community, both domestic and international.

The multiple exchange rate regime generated significant concerns with respect to the attendant market distortions, perceived limited transparency and arbitrage ensuing from the price differentials of the respective exchange rates. The Central Bank of Nigeria (“CBN”) introduced the multiple exchange rate regimes between 2014 and mid-2023 with the objective of allocating foreign exchange to exporters and SMEs under different foreign exchange windows such as the Investors & Exporters (I&E) window. The exchange rate system had its benefits and negatives. However, it would appear that in recent times, the negatives were considered to outweigh the benefits.

In particular, the multiple exchange rate regime was considered to restrict foreign investment inflows into Nigeria as investors became wary of the uncertainties associated with the exchange rate regime. The lack of clarity and transparency was believed to have discouraged foreign investment. In addition, the foreign exchange regime did

not help to provide the much-needed foreign exchange supply, which is critical to guarantee the repatriation of the proceeds of investment by foreign investors, and this constituted a major deterrent for foreign investment inflows.

The CBN, under President Tinubu’s administration, embarked on a number of foreign exchange policy reforms geared towards boosting foreign investment. The objectives were to provide transparency, certainty, and elimination of inconsistency in rates.

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This article first appeared in AVCA LEGAL & REGULATORY BULLETIN, in (April/2024). For further information, please go to avca.africa/data-intelligence/research-publications/