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CBN list requirements for third party participation in buying forex routed through Form M

The CBN has clarified its position on the removal of third parties from buying of foreign exchange routed through Form M.

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The Central Bank of Nigeria (CBN), in a new circular, has clarified its position on the removal of third parties from buying of foreign exchange routed through Form M, letters of credit, and other forms of payment

While reiterating its earlier directive that destination payment for all forms M, letters of credit, and other forms of payment should be made directly to the ‘Ultimate Supplier of Products’; it gave conditions that must be met by importers if they choose to use a buying company other than the primary manufacturer.

This was disclosed in a circular with Reference number TED/FEM/FPC/GEN/01/009, which was issued by the CBN to all authorized dealers and the general public on November 18, 2020, and signed by its Director for Trade and Exchange, Dr. O. S. Nnaji. The circular is a follow up to the one earlier issued by the apex bank on the same subject matter in August 2020.

According to CBN’s earlier directive, the name of the ultimate supplier of products should be the beneficiary on the Form M, Invoice, Bill of Exchange, Letter of Credit Instrument, and any other relevant document to the transaction.

The ‘Ultimate Supplier of Products’ means the direct party selling the goods to the importer, irrespective of whether the party involved is the manufacturer or internationally recognized buying company/supplier/agent.

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The circular from CBN states that the authorized dealers should ensure that payments are made only to the beneficiary whose name appears on the Form M, Invoice, Bill of Exchange, Letter of Credit Instrument, and any other relevant document.

It further states that where it is unavoidable that an importer chooses to use a buying company, other than the primary manufacturer, the importer shall make available the following documents as applicable, for consideration and approval by the CBN before opening Form M;

  • Detailed KYC and profile of the buying company.
  • 3 year audited financial statement of the buying company.
  • Letter of reference from the buying company’s banker, stating relationship and capacity.
  • Transfer pricing policy and arrangements in the home country.
  • Registration with its home country’s chamber of commerce.
  • Evidence of tax payments in the home country.
  • Evidence of authorization to act as agents and/or distributors to the original equipment manufacturer.

All authorized dealers are requested in the circular to ensure that the list of eligible third parties that meet the requirements above are submitted to the bank for authentication before onboarding.

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This clarification and flexibility by the apex bank on this new policy comes on the heels of outcry and criticism from importers and stakeholders on the practicability of the policy, which they say will negatively impact on the business of even genuine importers.

This means that importers who wish to use third parties other than the primary manufacturers will have to undergo some scrutiny and meet certain criteria before they can be considered eligible.

This policy by the CBN is seen as part of continued efforts to ensure prudent use of the country’s foreign exchange resources and is expected to help eliminate incidences of over-invoicing, transfer pricing, double handling charges, and avoid costs that are ultimately passed to the average Nigerian consumers.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

2 Comments

2 Comments

  1. Usman isyku

    November 19, 2020 at 11:47 pm

    Iam finish the inter view which date I collected money

  2. Aderibigbe Olubisi George

    November 21, 2020 at 5:54 am

    Hello Chike,

    I do believe that CBN still has one more circular to issue before the dust can fully settle on this matter.

    The two policies released have focused on Form M processing “Valid For Forex”

    transactions that are “Not Valid for Forex” should be exempted from these policies.

    My Head office in Europe buys and pays for all items in Europe for our operations in Nigeria. Hence, we do not make recourse to CBN for Forex, we apply for Form M under Not Valid For Forex, yet banks are putting us in the same category as importers who need forex.

    I think this should be looked into by CBN for consideration.

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Lagos State begins recruitment for Agripreneurship programme

The Lagos State Government commences the recruitment of eligible and interested candidates for its Lagos Agripreneurship Programme.

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Lagos State begins recruitment for Agripreneurship programme, Sanwo-Olu confirms Abisola Olusanya as new Agriculture commissioner

The Lagos State Government has commenced the recruitment of eligible and interested candidates for the Batches 4, 5, and 6 of its Lagos Agripreneurship Programme (LAP), under its Agriculture-based Youth Empowerment Scheme (Agric-YES).

This was disclosed by Lagos State Commissioner for Agriculture, Ms. Abisola Olusanya, according to the press release issued by the State Government.

READ: Mile-2 to National Theatre section of Lagos Blue Line Rail project is 98% completed – Contractor

Ms. Abisola Olusanya noted that the programme was in furtherance of the State Government’s objective of training no fewer than 15,000 youths and women in the various agricultural value chains by the year 2023.

She pointed out that the one-month training exercise is aimed at improving capacity, creating wealth, and employment in the agricultural value chains – poultry, piggery, aquaculture and vegetables.

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According to her, the strategic inclusion of the LAP Programme would efficiently reduce unemployment, create jobs and alleviate poverty in the State, as well as attract and pay more attention to the creation of jobs for women in agribusiness.

READ: First City Monument Bank announces the FCMB Agritech EPIC Pitch 2020, in partnership with Passion Incubator

Why this matters
According to the information contained in the press release, the training is expected to play a key role in the creation of 2000 Agro-Entrepreneurs who would, in turn, become job creators, promote food security, improve nutrition and general well-being of Lagosians, as well as create at least 4000 indirect jobs per beneficiary annually.

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The programme would also enhance economic activities of surrounding communities, curb the issues of unemployment, and reduce the crime rate within the State.

The initiative is an avid step towards achieving the State’s target of producing at least 25% of the food consumed by residents before the end of the year 2025.

READ: Lagos says 2020 land use charge law is people friendly, introduces self-billing method

What you should know

  • The Lagos Agripreneurship Programme is specifically tailored for men between the ages of 18 and 35 years and women between the ages of 18 and 55 years.
  • Interested and eligible candidates must have a minimum of Senior Secondary School Certificate and must have a passion for agriculture.
  • Candidates are to obtain application forms free of charge at the Agricultural Training Institute, Araga, Epe; Lagos State Agricultural Development Authority, Oko Oba, Agege; Lagos Agricultural Inputs Supply Authority, Odogunyan, Ikorodu; Coconut House, Mowo, Badagry and Ministry of Agriculture Area Office, Ajah, Eti Osa between Tuesday, 24th November and Tuesday, 8th December.
  • Candidates are expected to collect and submit application forms between November 24 and December 8, 2020.
  • Interested participants are expected to sit for a written examination on Monday and Tuesday, 14th and 15th of December, 2020, while oral interviews would take place on Friday and Saturday, 18th and 19th December, 2020.
  • Shortlisted successful candidates would start the formal training at the Agricultural Training Institute, Araga, Epe, on Tuesday, 5th of January, 2021.

READ: DPR shuts down 85 gas plants in Lagos for illegal operations

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What they are saying

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Speaking about the programme, Lagos State Commissioner for Agriculture, Ms. Abisola Olusanya said:

Following the training of a total of 400 participants under three batches of the Lagos Agripreneurship Programme, L.A.P, Lagos State will begin the recruitment and shortlisting of interested candidates for the Batches 4, 5 and 6 of the Programme.

READ: Lagos designs eligibility form for businesses to access N1billion seed capital

“The current reality and exigencies of job creation for the teeming youth population and attainment of food security requires that a more aggressive, strategic and efficient approach be employed in the training and empowerment of women and youths if Lagos State is to achieve a significant reduction of unemployment, create more jobs and wealth and also significantly enhance food security in the State by the year 2023.

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AfCFTA: Focus on manufacturing will boost diversification goals – FG

FG has stated that the AfCFTA will provide the platform for a robust focus and support for the manufacturing sector.

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FG releases new details on MSMEs support scheme, budgets N200 billion for loans, FG says 174,574 successfully register for N75 billion MSME survival fund in 48 hours

The Federal Government announced its commitment to Nigeria’s manufacturing sector and says the African Continental Free Trade Agreement (AfCFTA) will provide the platform for Nigeria’s diversification dreams, with a robust focus and support for the manufacturing sector.

This was disclosed on Tuesday by the Minister of State for Industry, Trade and Investments, Amb. Mariam Katagum, a commemoration of the 2020 Africa Industrialization Day (AID) in Abuja. The theme is: “Inclusive and Sustainable Industrialization in the AfCFTA and COVID 19 Era.”

Tuesday’s event was organized by the Federal Ministry of Industry, Trade, and Investments (FMITI) in collaboration with the United Nations Industrial Development Organization (UNIDO). The Minister disclosed the FG is aware of the challenges imposed on Nigerian manufacturers due to the pandemic and revealed the FG is doing its best in terms of viable policies, grants, and infrastructure.

The FMITI is a willing partner in providing the necessary enabling environment that will further stimulate industrialization, accelerate domestic and foreign direct investments,” she said.

“It will as well as ensure a coordinated and integrated approach to Nigeria’s Trade and Industrial policy. This year’s event provides the opportunity to deeply reflect on the state of the industrial sector and the apparent weaknesses which have been exacerbated by the COVID-19 pandemic.

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“It has become critical, more than ever before for governments at all levels in Africa to dedicate more time, energy, and resources for the growth and development of all categories of industries in the continent.

“A critical testimony to our effective responses to issues was evidenced at the onset of COVID-19 when the FMITI set up an Emergency Operation Center (EOC), which guaranteed unhindered production of goods and services in the industrial sector.

“To complement and sustain these efforts, we are repositioning the ministry to establish a similar response mechanism in all our industrial activities as a buffer to cushion the effects of the COVID- 19 Pandemic,” she said.

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(READ MORE: AfCFTA: States should take advantage of continental free trade – FG)

The Minister added that industrialization will boost Africa’s GDP and job prospects, especially with the ratification of the AfCFTA. She also said that a national focus on manufacturing with the African free trade deal will boost Nigeria’s diversification agenda and move towards a non-oil economy.

It is obvious that the implementation of AfCFTA, with a robust focus and support for the manufacturing sector will provide the platform for our quest for diversification to a prosperous non-oil dependent economy.

“Let me assure you that the Federal Government of Nigeria is geared up to meeting the demands of the enlarged continental market, which will be fostered by AfCFTA.

“This will attract more foreign direct investments into key industries and sectors of our economy, especially, where we possess comparative and competitive advantages.

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“The benefits of AfCFTA are quite enormous, some of which include increased food security, through reduction of the rate of protection on trade in agricultural produce amongst African countries,” she said.

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(READ MORE: AfCFTA: Continental free trade will reduce value erosion of naira – FG)

What you should know 

The Federal Government announced that it has ratified Nigeria’s membership to the African Continental Free Trade Area (AfCFTA), ahead of the December 5, 2020 deadline. The agreement goes into effect from the 1st of January 2021.

Yewande Sadiku, CEO of Nigerian Investment Promotion Council (NIPC), said in September that Nigeria was more ready for the African Continental Free Trade Area (AfCFTA) due to her domestic market manufacturing value addition capacity, which is 7 times the average of the top 20 economies in Africa and other.

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FG willing to implement new ideas to grow the economy – Osinbajo

The Federal Government has disclosed it is willing to implement new ideas suggested in the Economic Sustainability Plan.

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FG to slash import duties on tractors, buses, others in 2020 Finance Bill, Nigeria will not issue Eurobonds, says Vice President Yemi Osinbajo, FG guarantees mortgage loan to low income buyers at low interest rate, FG inaugurates gold refinery project in a landmark event

Vice President Yemi Osinbajo has announced that the Federal Government has been willing to implement new ideas suggested in the Economic Sustainability Plan (ESP) after the fallout of the pandemic on the nation’s economy.

This was disclosed by the media aide to the Vice President, Laolu Akande, in a statement on Tuesday in Abuja. He added that the Vice President disclosed this at a virtual meeting with the Franco-Nigeria Chamber of Commerce and Industry.

READ: Nigerian Railway Corporation announces revenue of N1.4 billion in 2020

What you should know 

In June, the Nigerian Government released its Economic Sustainability Plan which it hopes will address the economic challenges of the COVID-19 pandemic. The plan was put together by the Economic Sustainability Committee (ESC) assembled by President Muhammadu Buhari. Members of the committee included the Vice President, CBN Governor, 15  Ministers, GMD NNPC, and the Permanent Secretary.

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READ: Survival Fund: FG assures Nigerians that beneficiaries will be evenly distributed across states

The report said Nigeria should:

  1. Develop a clear Economic Sustainability Plan in response to challenges posed by the COVID-19 Pandemic;
  2.  Identify fiscal measures for enhancing distributable oil and gas revenue, increasing non-oil revenues and reducing non-essential spending, towards securing sufficient resources to fund the plan;
  3. Propose monetary policy measures in support of the Plan;
  4. Provide a Fiscal/Monetary Stimulus Package, including support to private businesses (with emphasis on strategic sectors most affected by the pandemic) and vulnerable segments of the population, and many others.

READ: We are working to clear N124 billion backlog of export claims – NEPC

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The Vice President disclosed that implementing the Plan was to save jobs and protect Nigerian businesses affected by the pandemic.

Osinbajo said, “It is important to recognise that the pandemic, which really is the cause of the downturn, not just in the Nigerian economy but practically all of our economies, all over the world, except perhaps China, also provides incredible opportunities for doing all manner of very innovative and creative things.

“And if you look at our ESP, which is our response to the pandemic, what we tried to do was to do a few things that we thought would be game-changing.

READ: FG says 174,574 successfully register for N75 billion MSME survival fund in 48 hours

“For example, one of the important things that we are trying to do with respect to renewable energy is with solar power.

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“We are collaborating with several solar power companies to provide within the next 12 months, five million Nigerian households with solar home systems.

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“This is partly to address the issues with the national grid by providing more off-grid capacity and provide more opportunities in the renewable energy space.

READ: Flour Mills’ GMD acquires shares worth ₦54.6 million

“ What we are doing is to get the financing through the Central Bank of Nigeria as part of the Economic Sustainability Plan.”

Osinbajo said backward integration is key to driving economic growth and urged for private sector commitment to align with the FG’s backward integration goals.

“For us, the issue of backward integration is right, front and centre, and it has been so for many years.

READ: Nigerian Breweries pioneers Nigeria’s first solar-powered brewery

“We believe that an aggressive pursuit of it is really important for us as an economic policy.

“The most important thing, as I said, is that we are committed to backward integration.

READ: De facto Government: CBN explains why it will keep funding the economy

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“Unfortunately, over the years, many companies have committed to backward integration but have simply not been as diligent and faithful with those promises.

“So, we really want to see much greater commitment and a plan that is as aggressive as our own aspirations,” he added.

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