The Central Bank of Nigeria has released new directives for destination payments, Form M, letters of credit and other forms of payments. Discover the latest updates.
The Central Bank of Nigeria (CBN) is the apex regulatory authority of the financial system in Nigeria. In a formal circular dated 24th August 2020, the CBN addressed some new directives on destination payments for Form M, Letters of Credit and other forms of foreign transaction payments.
This new directive which takes immediate effect, demands that authorized dealers should not open a Form M if payments are routed through agents or third parties. Authorized dealers should only open a 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 main objective of these new directives is to:
- ensure prudent use of foreign exchange resources,
- eliminate incidences of over-invoicing, transfer pricing, and double handling charges,
- and avoid costs that are ultimately passed to the average Nigerian consumer.
According to Dr. Ozoemena Nnaji, the Director for Trade and Exchange Department, this is in line with best practices around the world.
Additionally, the CBN will immediately introduce a Product Price Verification Mechanism to prevent over-pricing and or mispricing of goods imported into the country.
Ultimately, a platform shall be made available for all authorized dealers to verify quoted prices before the Form Ms are approved.
What are the requirements for opening an e-Form M?
To open an e-Form M the importer requires the following:
- Certificate of Incorporation/Registration of the company in Nigeria
- Registration with Federal Inland Revenue Services (FIRS)
- Proforma Invoice
- A Product Certificate (PC) for items regulated by SON
How do you obtain a Product Certificate?
To obtain a PC, you can contact your local Cotecna team, that will happily assist in you in the entire Product Certificate process.
Cotecna can also assist you in obtaining the SONCAP Certificate (SC), to process Pre-Arrival Assessment Report (PAAR) for clearance of goods from Nigeria port.
Cotecna can help you with this process. To learn more or obtain assistance, please contact us.