LCCI seeks reversal of CBN directive on ‘Form M’

The Lagos Chamber of Commerce and Industry (LCCI) on Sunday urged the Central Bank of Nigeria (CBN) to review its new directive on payments for imports in the interest of the Nigerian economy.

Director-General of LCCI, Dr Muda Yusuf in a statement in Lagos explained that the directive would have serious adverse effect on the economy especially during the current Covid-19 pandemic.

The CBN had, in an August 24, 2020 circular by the Director, Trade and Exchange Department, Dr. Ozoemena Nnaji, said it was introducing price verification mechanism on every product in order to check over-pricing or mispricing of imported goods.

The move, it stated, would ensure the “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.”

Form M is a mandatory statutory document to be completed by all importers for importation of goods into Nigeria.

The CBN requested all authorised dealers 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.

But Yusuf in the statement said the policy measure would create more problems than it would solve, as already, most foreign exchange transactions had been frozen on account of the directive by the CBN.

He said that it would cause disruptions on over 80 per cent transactions by the business community.

According to him, this negates the efforts of the government on improving the nation’s ease of doing business ranking.

Yusuf said that it was impractical to expect all importers of raw materials, equipment, and other inputs to buy directly from the ultimate producer, manufacturer, or supplier, especially in an economy driven by Small and Medium Enterprises (SMEs).

“While the Lagos Chamber of Commerce appreciates the efforts of the CBN in curbing abuses in the foreign exchange market, this policy measure would create more problems than it would solve.

“What this means is that the supply chain of over 80 per cent of the business community has once again been disrupted and dislocated.

“This is like substituting the global supply chain problem with a domestic supply chain disruption.

“Even in the domestic economy, distributors and dealers form the bridge that connects the major manufacturers to the retailers and consumers.

“Middlemen play a critical role in the supply and distribution chain in any economy, domestically and globally, as they bring a great deal of value to the process.

“We urge the CBN to please review this new policy on payments for imports to save the already ailing and distressed Nigerian economy from complete collapse.

“This policy negates the current laudable efforts by the government [and even the CBN itself] to ensure business continuity, sustainability, and recovery.

“It is also in conflict with the letters and spirit of the Economic Sustainability Plan of the Federal Government,” he added.