The Central Bank of Nigeria (CBN) says it will no longer approve payment of foreign exchange to Forms M applicants whose payments are routed through any buying company/agent or any other third parties of such.
Dr. O.S. Nnaji, the CBN Director of Trade and Exchange Department made this known in a memo he signed on Monday, August 24, 2020 stating that CBN will now pay the ultimate provider of goods and services the forex directly.
“As part of continued efforts by the Central Bank of Nigeria 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, Authorised dealers are hereby directed to desist from opening of Forms M whose payment are routed through a buying company/agent or any other third-parties,” the memo read.
“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 bank said the “directive is with immediate effect”.
CBN said it will now follow global best practices by verifying prices before approving forex for the purchase of goods and services abroad.
“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 country,” the bank added.
“All authorised dealers shall use this mechanism to verify quoted prices before Forms M are approved.”