CBN to Clamp Down on Forex Abuse by Dealers

The Central Bank of Nigeria has said it is eliminating foreign exchange abuse and other practices by dealers which affect goods purchased by the average Nigerian consumers.

The CBN said this in a circular on Monday to all authorised dealers and the general public which was signed by the Director, Trade and Exchange Department, Dr O. S. NNaji, and entitled ‘Destination payment for all Forms M, Letters of Credit and other forms of payment’.

Nnaji said, “Authorised dealers are hereby directed to desist from opening of Form M whose payments are routed through a buying company/agent or any other third parties.

“Accordingly, all authorised dealers are hereby requested to only open Form M for Letters of Credit, bills for collection and other forms of payment in favour of the ultimate supplier of the product or service. The directive is with immediate effect.”

He said the directive was part of continued efforts by the CBN to ensure prudent use of the nation’s forex resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges, and avoidable costs ultimately passed to the average Nigerian consumers.

Nnaji said in line with best practices around the world, the CBN would be immediately introducing a product price verification mechanism to forestall over-pricing and/or mispricing of goods and services imported into the country.

According to the apex bank, all authorised dealers should use the mechanism to verify quoted prices before Forms M are approved.

Form M is a mandatory statutory document to be completed by all importers for the importation of goods into Nigeria.

Without the form, goods cannot be approved for importation into the country.

The documentation process is put in place by the Federal Government through the CBN and the Nigeria Customs Service.

Form M or E-Form M allows the importer to access part shipments through the use of bulk Form M for a large project.