Nigeria - Country Commercial Guide
Trade Financing
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Methods of Payment

Methods of payment include confirmed irrevocable letters of credit, bills for collection, open accounts, or any other internationally accepted mode of payment. Note that imports on an open account basis are not guaranteed by the Nigerian government. Whatever the form of payment adopted, the proceeds must be repatriated within 90 days from the date of shipment of the consignment. U.S. exporters are advised to ship goods only on sight of confirmed and irrevocable letters of credit. The advisable method of quoting is “CIF.” U.S. firms also are advised that fraudulent business practices involving forged financial documents are common. Independent verification of the legitimacy of transactions is recommended. U.S. exporters should also consult with their bankers for document verification. It is necessary to confirm the validity of any Nigerian bank with the U.S. Commercial Service office in Nigeria.

Credit rating agencies approved by Nigeria’s Securities and Exchange Commission (SEC) include:

  • Augusto and Co.
  • Datapro Limited 
  • Global Credit Rating        

Some of these agencies also offer debt collection services. American companies should contact the U.S. Commercial Service for assistance with a list of vetted collection agents. Visa and Mastercard are the widely used cards in Nigeria for payments. The American Express card is also accepted but not as widely.

For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide.

Banking System

The Nigerian banking system currently consists of 24 commercial banks, 916 micro-finance banks, 5 discount houses, 94 finance companies, and 6 development finance institutions. The Central Bank of Nigeria (CBN) regulates and supervises the activities of these and “other financial institutions.” These include bureaus de change (BDCs), finance companies (FCs), primary mortgage institutions (PMIs), and FinTech companies. The CBN is primarily responsible for formulating monetary policy and monitoring the financial system, providing guidelines in areas such as credit and foreign exchange. Nigerian commercial banks perform three major functions: accepting deposits, granting loans, and operating payment and settlement mechanisms. 

The launch of CBN’s Payment Systems Vision 2020 (PSV 2020) in 2007 led to a sharp increase in the number of new FinTech companies operating in Nigeria. Most of them offer mobile lending, electronic payments, and personal finance solutions. The CBN has not yet crafted an omnibus regulation specifically for FinTech but oversees the industry through several guidelines such as “Guidelines for Licensing and Regulation of Payment Service Banks (PSB) 2018” and the “Framework and Guidelines for Mobile Money,” reissued in 2021.

Foreign Exchange Controls

Nigeria operates a system of multiple exchange rates. These include an interbank rate (banks lend to each other), international money transfer rate, an Importers and Exporters (I&E) Window established in April 2017, and a parallel market rate, also referred to as the grey market. The CBN eliminated the official exchange rate in May 2021, making a step toward unifying the multiple exchange rate regime. The International Monetary Fund (IMF) has been critical of the disaggregated exchange rates, noting that the absence of a single exchange rate creates confusion and deters foreign investments. In June 2016, the CBN sought to facilitate a more liquid and transparent foreign exchange market due to increased demand and low replenishment of reserves due to declining receipts from crude oil sales. CBN issued guidelines for the operationalization of the regime to remove tight controls on the naira and leave market forces to determine the value of the currency. The government has not implemented many of these measures and foreign exchange continues to frustrate both domestic and international businesses.

In June 2015, the CBN announced a list of 41 import items it said would no longer be valid for foreign exchange supply from official sources. The measure was taken for the stated reasons of safeguarding the naira, ensuring financial system stability, and shoring up external reserves. The list has since grown to 44 items. In July 2021, the bank discontinued the sale of foreign currencies to Bureaux de Change (BDC) operators as it accused institutions of undermining CBN efforts. It also suspended applications for and issuance of new BDC licenses. The CBN now channels weekly allocation of foreign exchange to commercial banks to meet legitimate demands for personal travel allowances (PTA), business travel allowances (BTA), tuition fees, medical payments, SMEs transactions, among others. Despite these measures to defend the Naira, the gulf between the official and unofficial exchange rates has continued to widen. As of December 2022, the grey market rate stabilized around 735 naira to the dollar. In contrast, the “official rate” listed on the CBN website was approximately 445 naira to the dollar.

To encourage foreign investments in Nigeria, the Nigeria government has, in theory but not practice, removed all barriers to repatriation of capital, profits, and dividends. Repatriation of proceeds from disposal of assets is allowed. Subject to payment of relevant taxes, investors are guaranteed unrestricted return of their investment capital and proceeds, in any convertible currency, if that capital was brought into Nigeria under a Certificate of Capital Importation (CCI). However, for the reasons stated above, CBN’s effort to defend the naira has severely restricted the ease with which foreign monies can now be repatriated from Nigeria. Overall, U.S. companies are encouraged to consult their Nigerian bankers for proper advice with respect to foreign exchange dealings.

U.S. Banks & Local Correspondent Banks

Citibank and JP Morgan are the only U.S. banks with a presence in Nigeria. However, United Bank of Africa (UBA) and Standard Chartered Bank both operate branches in the United States. Most Nigerian banks have correspondent relationships with U.S. banks.

For additional information, visit the U.S. Department of State Investment Climate Statements.