Here's Six Reasons Why CBN Eliminated Third Party In Forex Applications

Individuals or organisations with Form M who apply for forex through third parties such as companies and agents will no longer have access to forex as the Central Bank of Nigeria (CBN) tightens its grip on the disbursement of forex. The new policy by the CBN is to eliminate third parties in the process of acquiring forex.

AllNews gathered that CBN now wants to deal directly with the companies or applicants in need of forex and not a third party. This will enable CBN to track the disbursement and ensure prudent use of the forex. The decision is also expected to prevent double-handling as well.

Third-party collection of forex often affects the market price of goods and services as third parties place their fee for the collection of the forex on behalf of the applicant in need. The third-party financial cost are often placed on consumers, and the CBN in a statement wants to curb the culture.

So authorised forex dealers will no longer attend to Form M applications that are done by third parties on behalf of applicants. It was learnt that this will enable CBN to compare prices to the applicant's request, which will enable;

(1). Prudent use of forex and prevent;

(2). Over-pricing goods and services

(3). Mispricing of goods and services imported into Nigeria.

(4). Transfer pricing

(5). Double handling charges,

(6). Over-invoicing

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“As part of continued efforts by the Central Bank of Nigeria to ensure prudent use of 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 of Forms M whose payment are routed through a buying company/agent or any other third-parties,” the memo read.

“All authorised dealers are hereby requested to only open form M for letters of credit, bills for collection and other forms of payment in favour of the ultimate supplier of the product or service”. CBN said in a statement signed by the director of trade and exchange department at the bank,  O.S. Nnaji.

The financial regulator also stated that “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,” the bank added.

“All authorised dealers shall use this mechanism to verify quoted prices before Forms M are approved.” The CBN statement revealed. The new policy will take effect immediately.