Guaranteed Unconditional Transferability
Two events within the past few weeks have left me wondering whether or not one of the problems with governance and law enforcement in Nigeria is that we do not run the system in our native languages and have no local language versions of our various laws.
First, there was a “sting” in which houses were broken into and arrests made, but no one was actually caught red-handed breaking any law. Almost every where else in the world, stings are designed to catch suspects in the process of committing a crime. There is usually subterfuge and underhandedness at play — perhaps a mole is planted, or surveillance equipment deployed. If it wasn’t a sting, was it a “raid”, then? Perhaps, but raids typically uncover material that is patently illegal — guns, ammunition, prohibited substances. Was the move by the State Secret Police, whose business is with internal security matters, a sting or a raid, or something else entirely?
Secondly, there is currently a shakedown going on at the Senate. How can you tell that it is a shakedown? Well, the ‘distinguished’ gentlemen of the upper chamber have described what they are doing as a ‘hearing’ or an ‘investigation’ but their words and actions tell you something else is going on. You see them frothing at the mouth in the most ‘pavlovian’ fashion because of the sum being bandied — $13.9 billion. You also see them making conclusive remarks even before the ‘investigation’ has started. As at Thursday the 20th of October, the Chairman of the Senate Committee on Banking and Insurance, Senator Rafiu Ibrahim, was posting tweets about the investigated company’s “forex abuse”, “connivance with banks” and a “diabolical breach of constitutional process”. Both he and the Senate President, Dr Bukola Saraki, have both been credited with quotes saying the amount repatriated was “enough to pull Nigeria out of the economic recession”. You KNOW that the hearing is only a charade and the outcome has long since been predetermined.
The supposed issue is that the company in question, a local subsidiary of a South African company, did not obtain a Certificate of Capital Importation within 24 hours of its forex coming into the country, and that one was issued only 5 years later when it was required to process their profits repatriation request. The questions for determination here then are 2 — (i) does the late issuance of a CCI mean no capital was imported; and (ii) does the late issuance of a CCI mean that profits can no longer be repatriated and are essentially stuck in Nigeria? For the sake of all that is decent, sacred and in the interests of our country, the answers are both a resounding NO.
What is a CCI? It’s a document from the bank that processes the receipt of your foreign investment capital into Nigeria. It says the day on which the cash arrived, how much it was, and how much local currency the bank converted it into. Thinking about it like a receipt or any other certificate that authorities in this country are supposed to issue to you, like a passport or driver’s licence or a certificate of occupancy, for instance. If you file your passport application dutifully, and your passport took longer to be issued than the Immigration guidelines, can you be said to be travelling illegally? If your C of O took longer to be issued than the guidelines prescribe, are you holding your property illegally? When it took longer than 3 months to for your permanent licence to arrive after the temporary one expired, did that fact mean that you were driving illegally even though you had the licence? Whose responsibility was it to issue the CCI on time and who is being investigated?
This is all even an exercise in the irrelevant because the Nigerian Investment Promotion Council Act and the Foreign Exchange (Monitoring and Miscellaneous Provisions Act), are very clear on what the right of an investor is in Nigeria. Section 24 of the NIPC Act says “… a foreign investor in an enterprise to which this Act applies shall be guaranteed unconditional transferability of funds through any authorised dealer in freely convertible currency of (a) dividends and profits (net of all taxes) attributable to the investment…”
Section 15 of the FEMMPA says, similarly, in addition to spelling out whose responsibility it is to issue the CCI, “Foreign currency imported into Nigeria and invested in any enterprise pursuant to subsection (1) of this section shall be guaranteed unconditional transferability of funds, through an Authorised Dealer in freely convertible currency, relating to — (a) dividends or profits (net of taxes) attributable to the investment…”
In simple English, and perhaps the NIPC should translate this into our respective languages for the benefit of our good lawmakers of the national assembly, if a foreign investor has brought in foreign investment, as long as he has paid all the relevant taxes, he can repatriate ALL his dividends or profits. ALL.
As a previous edition of this column pointed out to government officials, government has no business with the dividends and profits of a company. The only legitimate question the Senate can pose here is, has the foreign company under investigation paid its taxes?
This conduct should be worrying for the President and his economic team because they are travelling the world telling people that Nigeria is open for business and that Nigeria is friendly to investors. The President recently returned from one of such trips to tell us that foreign investors are ‘falling over themselves’ to invest in Nigeria. Well, Mr. President and his team can rest assured that prospective investors talk to those who are already here. All foreign company subsidiaries established in Nigeria have it as a primary aim to send profits and dividends back home. If profits and dividends cannot be converted and transferred freely as our laws currently provide, foreign investors have little incentive to come here.
This article was first published in The Guardian, on the 25th of October 2016.