The Nigerian Shippers Council (NSC) may meet the Central Bank of Nigeria (CBN) over its new circular on Form ‘M’ in which the regulator directed banks to end the era of opening Form ‘M’ in which payment is made through third party, agent or buying company.
CBN had in the circular released last week 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 Manufacturers Association of Nigeria (MAN) said the good intention of the CBN was inimical to the survival of many manufacturers who may not be involved in any trade malpractices.
Speaking at a forum on the matter organised by the NSC, MAN added that most manufacturers, particularly small and medium sized enterprises (SMEs) go through accredited agents for their supplies, adding that many Original Equipment Manufacturers (OEMs) overseas do not supply goods directly to individual buyers.
Similarly, the Association of Nigerian Licensed Customs Agents (ANLCA) criticised the CBN circular, saying it was aimed at reintroducing pre-shipment inspection of imports through product price verification as against Destination Inspection (DI).
In a chat with newsmen at the sideline of the forum, the Executive Secretary, NSC, Mr. Hassan Bello, said the council as the ports economic regulator would be meeting the MAN, Lagos Chamber of Commerce and Industry (LCCI), freight forwarders associations and other stakeholders to aggregate their comments on the new CBN policy on Form ‘M’.
Bello said the council would after aggregating the views of critical stakeholders, look at what the CBN was doing, insisting that this was because the apex bank has done a lot.
He said, “Recently, I was at the Export Promotion Council and this issue came up. But we are still studying the situation and will make appropriate pronouncement.”
Also speaking, the Vice President of ANLCA, Dr. Kayode Farinto, told newsmen that such product price verification policy by CBN could mean that the CBN wants to bring back pre-shipment inspection and do away with DI.
He said what this meant was that the CBN would be engaging pre-shipment inspectors through the back door in total disregard to article seven 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 the implication of banning third party agreements in Form ‘M’ would affect Nigerian imports negatively, arguing that it could lead to job losses.
“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? “Kayode added.
“In the last one year, some 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,” he argued.