The Central Bank of Nigeria has made move against unwholesome attitudes of some importers of goods and services with regards to over-invoicing.
This move is in a circular issued to all authorised foreign exchange dealers could see a significant downward pressure on the naira.
Over-invoicing is a long standing and common practice though illegal that allows importers to source for foreign exchange at official rates to import goods at highly inflated values using third party suppliers which is many cases are dummy companies set up abroad by the beneficiary importers.
The dollar difference between real and actual import values is either stashed away abroad or returned to Nigeria for sale at the parallel market rates landing huge profits for beneficiaries.
In the circular no dated 24 August, 2020 titled: DESTINATION PAYMENT FOR ALL FORMs M, LETTER OF CREDIT AND OTHER PAYMENTS, signed by the CBN’s Director, Trade and Exchange Department, S.O Nnaji, the CBN directed that all authorised dealers (banks) open Form M for Letters of Credit, Bill for Collection and other forms of payment only in favour of ultimate suppliers of products.
The apex bank further said in line with international best practice it has introduced a Product Price Verification Mechanism to prevent over pricing/mis-pricing of goods and services imported into Nigeria.
Energy Frontier reports that the CBN directive will stop the illegal business practices from both bonafide and portfolio “importers” have long benefitted from sometimes in collaboration with bank officials.