business, ICT in Business

The Nigerian SME Forex Exchange Window?

I’m sure by now everyone who has a bank account and an email address linked with their bank account has received an email or two in regards to this subject. Small and Medium sized businesses can now access the Forex market via their respective banks for small scale importation. This, I believe, is good news, it’s great news for the Nigerian economy. Why is it great news for the Nigerian economy you ask? I say it is because the Nigerian economy is built on the backs of SMEs; not just the Nigerian economy but most economies are built on the countries’ SMEs. As at December, 2013, the total number of persons employed by the MSME (Micro & Small and Medium Sized Enterprise) was at 59,741,211, representing 84.02% of the labour force!

84.02% of the labour force as at 2013 was employed by MSME! Imagine that! 84.02%!

This is awesome! Really awesome! So when I get news like this, it really increases my hope for this great nation of ours. Building and investing in the nation’s Micro & SME sector is building and investing in the nation. Don’t get me wrong, let’s make and sell Nigerian! but in order to make good quality products, you need good quality materials and the last time I checked, Nigeria does not own every single raw material you need on earth!

So, back to the tori for town (talk of the day). I had a virtual meeting with a finance expert from Stanbic Ibtc Bank (Best bank in Nigeria) regarding the open Forex window; what it meant, who is an SME, and of course how can the Forex window be accessed. I’ll sum up the conversation in a bit but before I do that, I want to advertise my bank: Stanbic Ibtc Bank – a bank of excellence, a bank of prestige and one of the best customer centered banks I’ve come in contact with so far in Nigeria. Ok, having said that, here’s how the conversation went:

Question 1: Who can access the Forex? Who’s an SME? And how can the window be accessed?

Stanbic Representative: “The SME Forex Window is designed to provide SMEs (Small & Medium sized Enterprise) access to $20,000 (at bank exchange rate per time) per quarter for the importation of items”

“An SME as defined by the Central Bank of Nigeria (CBN) is an economically independent company with about 11 to 300 employees and an annual debit turnover of between N5million to N500,000. And in this regard, an SME may be a registered limited liability company or a business name.”

“The window can be accessed by SMEs upon fulfillment of the following basic requirements:

  • Completed Form Q (available at any Stanbic IBTC Branch)
  • Request letter from the customer (who must have run an account with Stanbic IBTC for at least six months)
  • A Proforma Invoice
  • Beneficiary Bank Transfer Details

These forms may differ from bank to bank

Question 2: How strict is the annual debit turnover of between N5m and N500k requirement? Does this forex window also accommodate startups who want to import?

Stanbic Rep: “The definition of an SME is very fluid. I only referred to the CBN definition but yes, we can sell to startups that meet the requirements.” The requirements meaning the basic requirements given in Question 1 and not the annual debit turnover requirement.

So, basically, this is the whole gist: If you’re a startup, Micro or Small and Medium sized enterprise, that is registered with the Corporate Affairs Commission (CAC) either as a business name or a limited liability, you can walk into your bank and ask about the forms you need to fill and whatever documents you need to provide. You can access the window every four months (quarterly) with a spending limit of $20,000 (at bank exchange rate per time).

As we know for a fact, that the “Nigerian factor” might make this process a bit more difficult than it ought to be, regardless of this, the mere fact that the banks and the CBN have decided to officially be of help to the startups and SMEs in importing items is a step up for me. So to give honour to whom honour is due: Thank you Nigeria!

As I already mentioned, this does not mean things like toothpick, hair-nets and certain things that can be produced here should be imported, no, no, no. Let’s make Nigerian, let’s make good quality and sell good quality in-house. It can be done! Importation of raw materials is a yes, yes, because without good raw materials you cannot make a good product. Importation of books – novels, educational books, etc is also a yes, yes. We can get bits and parts from the rest of the world, but let us make our own products, let us make Nigerian!

Please, if you have further questions regarding the Forex Window, you can comment on this post and I’ll ask the appropriate persons for the appropriate answers or of course you can always contact your bank.

For more advice and tips on today’s post, you can contact us via the contact us page.

You can also contact us regarding questions about any other ICT in Business related problems.

We are Ya’ats Advisory Services and we’re here to bring customer satisfaction your way.

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