CBN moves to check over-invoicing of imported goods
By Samuel Bankole
The Central Bank of Nigeria (CBN) said it plans to introduce a Product Price Verification Mechanism as part of measures to check over-pricing and wrong pricing of goods and services imported into the country.
The regulatory bank said in a circular to all foreign exchange dealers that the measure was meant to curb overpricing of goods and services by importers and reduce the burden of inflated prices on consumers.
It said banks are to use the mechanism to check price quotations by importers before approving any importation payment document submitted to them by importers.
This, the CBN said would help “forestall over-pricing and/or mispricing of goods and services imported into the country.”
The CBN also directed banks not to open importation documents, Forms M for importers who route their bills through third parties.
Form M, according to the CBN should only be opened for letters of credits, Bills for collection and other forms of payment in favour of the ultimate supplier of the product or service.
The regulator said the measures will ensure prudent use of foreign exchanger resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges, which ultimately are passed to Nigerian consumers.
Analysts said apart from the measure helping to check over-invoicing by importers, it will also curb foreign exchange arbitraging by who deployed the system to access more than needed foreign currencies from the bank.
READ CBN CIRCULAR: Destination Payments for all Forms M
The details of the circular signed by the CBN Director of Trade and Exchange, O.S Nnaji:
“As part of continued efforts by the Central Bank of Nigeria to ensure prudent use of our foreign exchanger 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.
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,” the CBN wrote in the circular.#GFD