CBN’s Directive on Form ‘M’, Ploy to Re-introduce Pre-shipment Inspection, Says ANLCA
The Association of Nigerian Licensed Customs Agents (ANLCA) Wednesday criticized the Central Bank of Nigeria (CBN) over its directive to banks to end the era of opening Forms ‘M’ in which payment is through third party, agent or buying company.
CBN said this was to end decades of over-invoicing and foreign exchange scam through which some importers and other businesses use to secure more foreign exchange allocations from banks.
But the Vice President of ANLCA, Dr. Kayode Farinto, said the directive was aimed at reintroducing pre-shipment inspection of imports through product price verification as against destination inspection (DI).
Farinto told news mean that such product price verification policy would mean that the CBN want to bring back pre-shipment inspection and do away with DI.
He said what this means is that the CBN would be engaging pre-shipment inspectors through the back door in total disregard to article 7 of the general agreement on tariff and trade which requires five to six principles before a price is agreed that Nigeria has entered into in agreements and protocols.
He also said that the implication of banning third party agreements in Form-M will affect Nigerian imports negatively, but more seriously as many will lose their jobs.
He also said what the CBN wants to do was not its statutory responsibility, adding that should be left for the Ministry of Finance and the Nigeria Customs Service (NCS).
Kayode added, “The CBN said that to ensure prudent use of foreign exchange resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges, and avoidable costs that are ultimately passed to the average Nigerian consumers, they are eradicating third party involvement in Form-M.
“Whoever signed this circular does not have the interest of Nigerians at heart because what this policy means is that there won’t be third-party involvement in Form-M again.
“Why is the CBN dabbling into fiscal policy issues? Why is CBN not focusing on the monetary policy function that is germane to its operation?
“In the last one year, about 81 items have been on the forex prohibition list, causing many importers not to want to declare what they bring in. As if this is not enough problem for us at the ports, the CBN alters the Naira exchange rate at its own whims and caprices. You can wake up tomorrow and the Nigerian Customs Services (NCS) will tell you that the CBN has changed the exchange rate. Now the CBN has banned third-party involvement in Form-M issuance. This is killing trade and will affect the nation’s import volume.
“Globally, outsourcing is acceptable. There is no way we can do away with third party arrangement with the way global trade currently is. The CBN policy on Form-M is going to kill a major component of trade and ultimately kill our economy.
“What we expect CBN to be doing is to look at how to stabilise our exchange rate which has been fluctuating in the last four months. Last year, we were actually using N345 to a Dollar to process import declaration. This year, we are now using N361 to a Dollar to do the same job. As I am talking to you, we are already hearing that it will change to N381 to a dollar in the next few weeks. There is no predictability in our exchange rate, and this is not helping trade.
“The CBN product price verification policy simply means that they want to bring us back to the pre-shipment inspection era. Nigeria is already in designation inspection era, we just hope that the CBN is not taking us back to the pre-shipment inspection regime” .
CBN has in a circular signed by the CBN Director, Trade and Exchange Department, Dr. Ozoemena Nnaji, the bank said it has introduced price verification mechanism on every product in order to check over-pricing or mispricing of imported goods.
In the circular dated August 24, the apex bank explained that the measure was to ensure prudent use of foreign exchange, adding that this was the only way to check such issues of over-invoicing, transfer pricing, double handling charges and avoidable costs.
The circular which was addressed to all authorised dealers and members of the public reads: “As part of continued efforts of the CBN to ensure prudent use of our foreign exchange resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges and avoidable costs that are ultimately passed to the average Nigerian consumers, authorised dealers are hereby directed to desist from opening Forms ‘M’ whose payment are routed through a buying company, agent or any other third parties.
“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.
“Additionally, in line with best practices around the world, the CBN will be immediately introducing a product price verification mechanism to forestall over-pricing and/or mispricing of goods and services imported into the country.
“All authorised dealers shall use this mechanism to verify quoted prices before Forms ‘M’ are approved. Please ensure strict compliance.”
Form ‘M’ is a mandatory requirement for all imports into Nigeria.
CBN said this was to end decades of over-invoicing and foreign exchange scam through which some importers and other businesses use to secure more foreign exchange allocations from banks.
But the Vice President of ANLCA, Dr. Kayode Farinto, said the directive was aimed at reintroducing pre-shipment inspection of imports through product price verification as against destination inspection (DI).
Farinto told news mean that such product price verification policy would mean that the CBN want to bring back pre-shipment inspection and do away with DI.
He said what this means is that the CBN would be engaging pre-shipment inspectors through the back door in total disregard to article 7 of the general agreement on tariff and trade which requires five to six principles before a price is agreed that Nigeria has entered into in agreements and protocols.
He also said that the implication of banning third party agreements in Form-M will affect Nigerian imports negatively, but more seriously as many will lose their jobs.
He also said what the CBN wants to do was not its statutory responsibility, adding that should be left for the Ministry of Finance and the Nigeria Customs Service (NCS).
Kayode added, “The CBN said that to ensure prudent use of foreign exchange resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges, and avoidable costs that are ultimately passed to the average Nigerian consumers, they are eradicating third party involvement in Form-M.
“Whoever signed this circular does not have the interest of Nigerians at heart because what this policy means is that there won’t be third-party involvement in Form-M again.
“Why is the CBN dabbling into fiscal policy issues? Why is CBN not focusing on the monetary policy function that is germane to its operation?
“In the last one year, about 81 items have been on the forex prohibition list, causing many importers not to want to declare what they bring in. As if this is not enough problem for us at the ports, the CBN alters the Naira exchange rate at its own whims and caprices. You can wake up tomorrow and the Nigerian Customs Services (NCS) will tell you that the CBN has changed the exchange rate. Now the CBN has banned third-party involvement in Form-M issuance. This is killing trade and will affect the nation’s import volume.
“Globally, outsourcing is acceptable. There is no way we can do away with third party arrangement with the way global trade currently is. The CBN policy on Form-M is going to kill a major component of trade and ultimately kill our economy.
“What we expect CBN to be doing is to look at how to stabilise our exchange rate which has been fluctuating in the last four months. Last year, we were actually using N345 to a Dollar to process import declaration. This year, we are now using N361 to a Dollar to do the same job. As I am talking to you, we are already hearing that it will change to N381 to a dollar in the next few weeks. There is no predictability in our exchange rate, and this is not helping trade.
“The CBN product price verification policy simply means that they want to bring us back to the pre-shipment inspection era. Nigeria is already in designation inspection era, we just hope that the CBN is not taking us back to the pre-shipment inspection regime” .
CBN has in a circular signed by the CBN Director, Trade and Exchange Department, Dr. Ozoemena Nnaji, the bank said it has introduced price verification mechanism on every product in order to check over-pricing or mispricing of imported goods.
In the circular dated August 24, the apex bank explained that the measure was to ensure prudent use of foreign exchange, adding that this was the only way to check such issues of over-invoicing, transfer pricing, double handling charges and avoidable costs.
The circular which was addressed to all authorised dealers and members of the public reads: “As part of continued efforts of the CBN to ensure prudent use of our foreign exchange resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges and avoidable costs that are ultimately passed to the average Nigerian consumers, authorised dealers are hereby directed to desist from opening Forms ‘M’ whose payment are routed through a buying company, agent or any other third parties.
“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.
“Additionally, in line with best practices around the world, the CBN will be immediately introducing a product price verification mechanism to forestall over-pricing and/or mispricing of goods and services imported into the country.
“All authorised dealers shall use this mechanism to verify quoted prices before Forms ‘M’ are approved. Please ensure strict compliance.”
Form ‘M’ is a mandatory requirement for all imports into Nigeria.
FOLLOW US
About Post Author
