In addition, the central bank announced the introduction of a product price verification mechanism, which is to help prevent overpricing or mis-pricing of imported goods and services. It said the move was part of its continued efforts to ensure prudent use of the scarce foreign exchange resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges and avoidable costs that are ultimately passed to the average Nigerian consumers.

The CBN took the measures in a circular titled: “Destination Payment for All Forms M, Letter of Credit and Other Forms of Payment,” dated August 24, 2020, addressed to all authorised dealers and members of the public was signed by the Director, Trade and Exchange Department, CBN, Dr. Ozoemena Nnaji.

A Form M is a mandatory statutory document to be completed by all importers for the importation of goods into Nigeria. It is mandatory for all importers to complete and register Form ‘M’ with authorised dealers at the time of placing orders.

The CBN said: “As part of continued efforts of the CBN to ensure prudent use of our foreign exchange resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges and avoidable costs that are ultimately passed to the average Nigerian consumers, authorised dealers are hereby directed to desist from opening Forms ‘M’ whose payment are routed through a buying company, agent or any other third parties.

“Accordingly, all authorised dealers are hereby requested to only open Forms ‘M’ for Letters of Credit, bills for collection and other forms of payment in favour of the ultimate supplier of the product or service. This directive is with immediate effect.

“Additionally, in line with best practices around the world, the CBN will be immediately introducing a product price verification mechanism to forestall over-pricing and/or mispricing of goods and services imported into the country.

“All authorised dealers shall use this mechanism to verify quoted prices before Forms ‘M’ are approved. Please ensure strict compliance.”

Over-invoicing of imports have been a major drain on the nation’s external reserves, which stood at $35.597 billion as of August 20, according to figures obtained on the CBN’s website.

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