The Central Bank of Nigeria (CBN) has banned banks from opening Forms M (FOR IMPORTERS) “whose payments are routed through a buying company/agent or any other third parties.”
Form M is a mandatory document that must be completed by all importers for importation of goods into the country.
In a circular posted on its website yesterday, the apex bank said that henceforth, banks should “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.”
In addition, CBN said it would immediately be introducing a “Product Price verification mechanism,” to prevent, “overpricing and/or mispricing of goods and services imported into the country.”
According to the regulator, all banks must use the Product Price verification mechanism to “verify quoted prices before Forms M are approved.”
CBN said the fresh measures are part of its efforts to ensure prudent use of the country’s 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 consumer.”
Following the sharp drop in the price of oil (the commodity that accounts for over 90 per cent of the country’s export earnings) CBN has recorded steady decline in its for- eign exchange reserves, a development that has made it difficult for the apex bank, in recent times, to meet forex demand.
It has thus resorted to introducing measures that are aimed at conserving the reserves. Last month, CBN directed banks to immediately discontinue the processing of Forms M for maize/corn importation into the country, thereby adding maize to its list of 41 (now 44) imported goods and services that are banned from accessing Nigeria’s official Foreign Exchange Market.