Introduction
Prior to the promulgation of the Nigerian Investment Promotion Decree (No. 16) 1995[1], the Nigerian economy experienced an alarming rate of diminution of foreign investments and capital flight as a result of the implementation of the Indigenization Policy in 1972[2].
The promulgation of the Nigerian Investment Promotion Decree (No. 16) 1995, and the Foreign Exchange (Monitoring and Miscellaneous Provisions) Decree (No. 17) 1995, forms the bedrock for the shift from guided deregulation and partial liberalisation to an open economy targeted at attracting foreign investments in Nigeria. These laws alongside other laws regulate and provide the guidelines for foreign participation in the country.
As an incentive for foreign participation, these laws guarantee amongst other benefits, repatriation of foreign currency imported and invested in any enterprise in Nigeria, in freely convertible currency, through Authorised Dealers[3]. The Authorised Dealers, which are usually commercial banks are required to issue a Certificate of Capital Importation for this purpose[4].
Certificate of Capital Importation (CCI)
A CCI is a certificate issued by an Authorised Dealer confirming the importation of foreign currency, which can either be in cash or goods, by an investor. It is aimed at providing foreign investors with statutory evidence of capital inflow/investment into a Nigerian company. It legitimizes and facilitates the repatriation of dividends, profits and capital in the investor’s currency of choice.
A CCI is required for both Foreign Direct Investment[5]and Foreign Portfolio Investment[6]. The CCI is processed by submitting the relevant documents required by an Authorised Dealer, and is usually issued within 48 hours of such application.
The application process for a CCI depends on the nature of foreign capital[7]to be imported, and the mode of investment. Some of the documents include an application letter by the investor, a board resolution authorizing the investment, a tested SWIFT telex copy stating amount and purpose of inflow etc.
It is important to bear in mind that the CCI is required to obtain a business permit and expatriate quotas for the Nigerian subsidiary of a foreign company.
CCIs were issued in hard copy and, for repatriation purposes, the hard copy of the CCI had to be marked down by the bank. This has led to a situation where investors are unable to make repatriations in the event that an original CCI had been lost or destroyed. The Central Bank of Nigeria (CBN) has now decided to automate the process by migrating to electronic CCIs (e- CCIs)[8].
Implementation of Electronic Certificate of Importation (e-CCI)
Migration to the e-CCI was first announced by CBN in 2016. The CBN revealed its plan to phase out the physical CCI which will be replaced by the e-CCI. In 2017, CBN released a circular titled “Implementation of Electronic Certificate of Capital Importation (eCCI) to this effect on September 7, 20170[9].
According to CBN, the e-CCI is intended to enhance transparency and efficient processing of foreign investment flows to the country.
The application process for the e-CCI remains the same as that of physical CCI except that this time around, the foreign investor upon successful application, will be provided a password which can entered on the e-CCI platform to obtain view or print the e-CCI.
The accruing benefits expected from the e-CCI are as follows[10]:
- Alleviate challenges with handling/safe-keeping of physical CCIs
- Provides a platform to the banks to issue, administer and reconcile their stock of CCIs in an automated and efficient manner.
- CCI transfers and indemnity letters amongst banks will be done online; thereby improving efficiency and turn-around-time (TAT).
- Requests requiring CBN’s approval will be sent online and status can be easily tracked. This would improve TAT.
- Improve Banks’ Internal processes by minimising operational overburden due to manual processing.
- Reduction in paper usage and printing cost with the resultant positive impact on the environment.
- Facilitates reporting and CBN monitoring/supervision of the CCI process and handling by the banks and its customers.
- Affords various investors the opportunity to view their stock of CCIs across the various Banking institutions in Nigeria electronically.
- Investors can view their individual CCIs and total stock/value of CCIs online across the various banks and can have better oversight on them.
Conclusion
One of the objectives of the migration from hard copies to e-CCI is clearly to automate and digitize the Certificate of Capital Importation (CCI), it is therefore expected that this automated process will mitigate the errors associated with previous manual processing, and will also facilitate the delivery of efficient services to all stakeholders in the country.
The above information is for educational purposes only and does not constitute legal advice by Blackwood & Stone LP. Readers are advised to consult a professional with regards to their Land Use Charge obligations. For comments and enquiries, please contact Blackwood & Stone LP on:
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[1]Now referred to as Nigerian Investment Promotion Commission Act, Chapter N117, Laws of the Federation of Nigeria, 2004.
[2]This policy led to the enactment of the Nigerian Enterprises Promotion Acts of 1972 and 1977. Its aim was to ensure that majority of shares of Nigerian enterprises were owned by Nigerians, a lot of foreigners withdrew from the economy as a result of this.
[3]Section 15 of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act Chapter F34, Laws of the Federation of Nigeria, 2004. The Act empowers the Central Bank of Nigeria to appoint an Authorised Dealer.
[4]Section 15(2) of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act
[5]Investment by establishing an enterprise in Nigeria.
[6]Investment in the securities of a Nigerian enterprise.
[7]According to Section 41 of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, these include convertible currency, plant, machinery, equipment, spare parts, raw materials and other business assets, other than goodwill brought into Nigeria with no initial disbursement of Nigerian foreign exchange and intended for the production of goods and services related to an enterprise
[8]http://www.mondaq.com/Nigeria/x/501530/Financial+Services/Central+Bank+of+Nigeria+introduces+electronic+certificates+of+capital+importation+eCCI
[9]https://www.cbn.gov.ng/Out/2017/CCD/Re%20Implementation%20of%20eCCI.pdf
[10]http://fmda.com.ng/eccis_faq/