FX Crisis: CBN Introduces Mechanism to Verify Prices of Imported Goods

August 25, 2020
CBN interbank forex market

By Adedapo Adesanya

The current shortage in foreign exchange (forex) in the country has forced the Central Bank of Nigeria (CBN) to introduce a mechanism for the verification of imported goods.

A circular issued on Monday said henceforth, prices of goods and services into the country will first undergo a pricing verification system before a Form M can be approved for such.

In recent times, the local currency, the Naira, has come under pressure at the currencies market because of a shortfall in FX earnings for Nigeria, especially from the sale of crude oil, the nation’s main source of forex.

Banks have had to significantly reduce the spending limit of their customers’ international transactions to $100 per month from $3,000 per month at a point this year.

In the circular yesterday signed by the Director of Trade and Exchange Department at the CBN, Mr O.S. Nnaji, the apex bank said it will immediately introduce a product price verification mechanism to forestall over-pricing and/or mispricing of goods and services imported into the country.

As a result, it has directed all authorised dealers to use this system for the verification of quoted prices before Forms M are approved, warning that this directive must be adhered to strictly.

“In line with best practices around the world, the CBN will be 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,” the statement to the forex traders said.

Also, the central bank said forex should not be sold directly to buyers of goods and services but directly to the provider or supplier of the goods/services.

The bank explained that this was “part of continued efforts to ensure prudent use of the nation’s forex resources and eliminate incidences of over-invoicing, transfer pricing, double handling of charges and avoidable costs that are ultimately passed to the average Nigerian consumers.”

“Authorised dealers are hereby directed to desist from the opening of Forms 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 Forms M for Letter of Credit, Bills for collection and other forms of payment in favour of the ultimate supplier of the product or services. This directive is with immediate effect,” the notice said.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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