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Sunday, December 4, 2022

CBN Bans Banks from Selling Dollars to Third Parties for Imports

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The Central Bank of Nigeria (CBN) in a bid to conserve foreign exchange (FX) has directed Authorised FX Dealers to stop opening Forms M, whose payments are routed through a buying company/agent of any other third parties.

The CBN in a circular to ‘All Authorised Dealers’ released today and seen by MoneyCentral, said it was part of efforts to ensure prudent use of the country’s foreign exchange resources, eliminate incidences of over-invoicing, transfer pricing, double handling charges and avoidable costs to the Nigerian consumer.

“It is an evidence of serious FX shortage even so it may help to check over invoicing approach of companies,” an economist with a major FX dealing bank told MoneyCentral.

The CBN has struggled to meet dollar demand in Africa’s largest economy and has been resorting to unorthodox policies to manage the shortage of dollars amid a slump in oil prices during the recent corona virus pandemic.

CBN dollar reserves stood at $35.59 billion as at August 20, according to data from the CBN website.

Forms M aims to monitor goods that are imported into Nigeria, as well as enable the collection of import duties where applicable.

All importers into Nigeria need to process the e-Form M through an Authorized Dealer Bank, irrespective of the value of their goods and whether or not payment is involved.

“Accordingly, all Authorised Dealers are hereby requested to only open Forms M for Letters of Credit, Bills for collection and other forms of payment in favour of the ultimate supplier of the product or service. This directive is with immediate effect,” the CBN said in the circular signed by O.S. Nnaji, Director, Trade and exchange department of the CBN.

The CBN also said it will be immediately introducing a Product Price Verification Mechanism to forestall overpricing and mispricing of goods and services imported into the country.

“All Authorized Dealers shall use this mechanism to verify quoted prices before Forms M are approved,” the CBN said.

 

 

 

 

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