The Manufacturers Association of Nigeria (MAN) has examined the recent circular issued by the Central Bank of Nigeria (CBN) with ref. no: TED/FEM/FPC/PUB/01/001 of 21st January 2022 titled “GUIDELINES ON THE INTRODUCTION OF E-VALUATION, E-INVOICING FOR IMPORT AND EXPORT IN NIGERIA”.
MAN appreciates the efforts of the CBN, and by extension, the Federal Government, to sanitize foreign trade transactions in Nigeria. Without a doubt, we are persuaded that it has some measure of impact on the foreign exchange profile of the country, which appears to be a major reason for the guidelines. It is, however, necessary that the apex Bank’s attention be drawn to some issues that require clarifications and others that should be reviewed. There is a need to ensure that the CBN does not go-ahead to implement the guidelines without accommodating the constructive inputs of stakeholders, especially those whose businesses would be negatively impacted.
• We noted that the implementation date on the circular is scheduled for 1st February 2022; whereas the guideline itself was issued on the 21st January 2022. This is just 11 days of grace before implementation. This is rather hasty. A circular on monetary or fiscal guidelines requires adequate adjustment time. This is more so when it involves international trade and transactions; where a minimum of 90 days allowance of time is normally required, as many operators would have opened Form M and concluded deals either for import or export. Straightaway, one must say that transactions already embarked upon before the commencement of the guidelines should be exempted and the commencement date should be extended by a minimum of 90 days.
• The new regulation is primarily aimed at achieving near the accurate value of imports and exports in Nigeria. It says any Form M or NXP that bears a unit price in excess of 2.5% of the verified global checkmate price will not be approved. This is concerning as it will checkmate the opportunity of our exporters to derive higher value for their exports. Besides, we are worried about the determination of the global price verification mechanism and benchmark prices.
•What happens if some companies are able to negotiate better prices due to their scale of order and are able to get competitive lower prices? Will these competitive prices be within the benchmark? Clearly, this aspect of the policy will lead to several challenges on valuation down the line including a floodgate of valuation issues with Nigeria Customs Service (NCS).
• We also seek clarification on paragraph D of the guidelines wherein the CBN is directing that…” the content of the electronic invoice authenticated by Authorized Dealer Banks is only advisory for the Nigeria Customs Service (NCS)”. This means that the NCS may vary it, probably uplift the FOB when issuing the PAAR. MAN considers CBN and NCS as agencies of the Federal Government and hence should harmonize their functions in this regard. Otherwise, businesses and indeed our members will be subjected to paying unnecessary and additional FOB upliftment by the Nigeria Customs Service. This is in addition to a situation that may arise where the CBN forces such an importer or manufacturer to reduce its price if it is considered not in conformity with the benchmark pricing.
• In paragraph H, the CBN directs suppliers and buyers to transmit their authenticated invoices would be transmitted through the CBN-appointed Service Provider to the Nigeria Single Window portal. While MAN considers this measure as a step to check perceived malpractices, we believed that the essence of the Single Window’ policy is being diminished and this could introduce unnecessary bureaucracy with attendant multiple charges. We already contend with this type of anomaly and could ill afford any addition. It will also be a disincentive to local and foreign investors.
• Finally, the annual subscription fee charge of $350 per authentication by suppliers on the portal meant to maintain the system, is a clear disincentive to suppliers of imports to Nigeria, particularly raw materials and spares for manufacturers. This has the potential of triggering a run-on Nigeria business by their foreign partners and simultaneously encouraging these suppliers to look elsewhere in the region as well as the continent.
The Manufacturers Association of Nigeria (MAN) therefore, would appreciate that the CBN considers all the issues raised above and suspend the policy guidelines for now; as well as give adequate consideration for a stakeholders’ dialogue with a view to addressing the concerns. There should also be a clear, step-by-step process of transaction under the guidelines. This is necessary to ensure that government does not inadvertently create a regime of chaos that will decelerate the already low level of activity in the manufacturing sector in particular and the economy in general. We should avoid a situation that will give the regulators a leeway to ride roughshod over private business owners who are already groaning under an inclement operating environment.
SEGUN AJAYI-KADIR, mni.