Nigeria’s Central Bank issues new forex exchange directives to tame abuse by dealers

NIGERIA – The Central Bank of Nigeria has issued new directives aimed at eliminating foreign exchange abuse and other practices by dealers which affect goods purchased by the average Nigerian consumers.

In a circular addressed to foreign exchange dealers, the Central Bank of Nigeria directed authorized dealers to desist from opening of Form M whose payments are routed through a buying company/agent or any other third parties.

CBN further directed that all authorised dealers 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.

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.

CBN’s Director, Trade and Exchange Department, Dr O. S. Nnaji said the directive was part of continued efforts by the CBN to ensure prudent use of the nation’s forex resources.

He explained that through the directive, CBN aimed to 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 financial industry regulator, all authorised dealers will be required to use the mechanism to verify quoted prices before Forms M are approved.

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