The Lagos Chamber of Commerce and Industry (LCCI) has appealed to the Central Bank of Nigeria (CBN) to review its new directive on payments for imports in the interest of the Nigerian economy.
In a statement on Sunday, Director-General, LCCI, Dr Muda Yusuf, said the appeal became pertinent following the devastating shocks businesses were undergoing, especially with the coronavirus pandemic.
CBN had on August 24, issued a circular on a new directive as part of continued efforts to ensure prudent use of the nation’s forex resources and eliminate incidences of over-invoicing.
CBN, in the circular, directed authorised dealers to desist from opening of Form M whose payments are routed through a buying company/agent or any other third parties.
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.
The bank said that all authorised dealers should use the mechanism to verify quoted prices before Forms M are approved.
The LCCI DG said:“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 said.
Explaining further, Yusuf said the SMEs lacked the capacity to place huge orders that the main producers or manufacturers would require.
He said: “There is high degree of uncertainty which fuels speculation; there is a high component of forex demand driven by the arbitrage opportunities which differential rates offer.
“There is the component of demand driven by accumulation of inventories of raw materials caused by the current opacity in the market; there is the desperation of the non-resident portfolio investors to exit the Nigerian economy.
“The proposal on price verification would amount to another layer of bureaucracy with the attendant problems that comes with such bottlenecks.
“Once the exchange rate management framework is right, it would be absolutely unnecessary to introduce another hurdle of price verification.
“Therefore, the policy response should be situated in the context of these underlying conditions”
