Nigerian importers have reacted angrily to a recently implemented policy of the Central Bank of Nigeria that requires foreign suppliers to register on its website and abide by its pricing rules.
They warn that the upcoming policy will result in a shortage of goods in the country and will trigger inflation.
In January, the Central Bank of Nigeria introduced enhanced guidelines for international trade, requiring importers and exporters to submit e-invoices instead of hard copies of previous transactions. An annual fee of $350 will also be charged.
E-invoices will be authenticated by commercial banks before they are uploaded to the Nigerian Single Window portal – Trade Monitoring System.
In addition to the requirement to directly register on CBN’s web portal, the policy is controversial since it requires foreign companies selling to Nigerian importers to do so. Financial and contact information, as well as pricing, will be required from these companies.
By using a “global price verification mechanism guided by a benchmark price,” the CBN will compare the prices of imported items with those in other countries.
In the circular, the CBN explained that “the benchmark price is the actual spot market price on the date of invoicing on the market where the goods were traded.”
An e-invoice whose price does not match the CBN benchmark price will generate a query that prevents banks from issuing letters of credit to foreign suppliers.
In addition to requiring importers to charge the right price, the policy, which takes effect today, will check importers from underpricing or overpricing to cheat on taxes and import duties, as covered by PREMIUM TIMES .
Foreign companies registering themselves directly, however, could backfire on importers as they have no control over foreign entities.
“If you want $350, you can ask the importer to pay and register the suppliers on the portal. Not to ask them to register themselves,” an importer said, requesting anonymity. The price monitoring plan, according to him, is not realistic.
“If I reach a deal with a supplier abroad, and they book a space for my goods on the ship, and we cannot pay them, then they will charge us debt freight. They will even stop selling to you because they think you are not serious,” he said.
The rapid changes in price in some sectors, such as oil and gas, made it difficult for the importers to return to suppliers multiple times and request price adjustments to settle CBN queries.
They also spoke about price variations as a result of the quantity of purchase or the fact that a new product is offered at a discounted rate.
When importers fill out forms in Nigeria and elsewhere, they are required to indicate the products they are buying. This is reflected in what is called the Harmonised Commodity Description and Coding System, or HS Code.
“There is HS Code for TV, not for Samsung or LG. So if a new product comes out and is sold at a discounted rate, how will the difference in pricing be accounted for since the CBN’s prevailing price will likely be for the known brands,” he added.
“It’s not going to work. It will simply make life miserable for importers and many companies will be blacklisted, resulting in their inability to buy products, which will lead to scarcity and high prices.”
The trade portal should already know how much duty traders must pay at the ports after traders enter the HS Code on the trade portal. However, this has not been the case till now. The code also helps traders determine if certain items are prohibited.
To obtain unit prices for goods, they would request a Performance Invoice (PFI) from their suppliers. Following that, these documents would need to be uploaded on the CBN’s trade portal so that both the CBN and Customs Service could access and approve the PFI.
For forex, traders approach the CBN through their banks, depending on the payment terms.
The process was used in the past by traders to inflate prices so they could receive more foreign currency, PREMIUM TIMES reported.
“Some traders convince their suppliers to inflate the price of goods in order to get more money from the apex bank,” Samuel Okorie, an importer, told PREMIUM TIMES.
“For example, an importer can tell the supplier to indicate that the price of a product is N5 when it is N2,” Mr Okorie said.
Additional funds may be used to purchase other items, including products on the CBN’s ban list. “Likely, the APEX bank wants to end this,” he said.
While some importers welcomed the CBN’s efforts to tackle such malpractices, they expressed concern about the method.
In Mr. Okorie’s opinion, the policy will hurt his business, since the government should not determine the price of his goods. According to him, regulating the price cannot solve the problem of shortage of forex, which is a major problem in the market.
“How can you tell me the price at which I should buy and sell when you are not assisting me in production or financing,” he said.
A second importer, Samuel Akpan, said that the process would make importers pay more as customs will also charge them.
He said no matter how accurate the value of a product is, the Nigerian customs have a way to “find a non-existing fault and extort money from traders.”
“The process is not the problem but the apex bank needs proper consultation with all stakeholder, this includes traders, the presidency, lawmakers, NCS and look for a solution,” said another importer, Kayode Abdulrauf.
“This policy is not an economic policy, rather, it is a political policy. In fact, they clearly stated that they are working differently from customs. NCS is a revenue-generating agency. So they have a target to achieve. They have to generate revenue to finance the deficit budget.
In either case, the importer loses, Mr Abdulrauf explained.