Monday, May 20, 2019

How CBN Can Generate Accurate Data for Non-Oil Export In Nigeria

One of the main objectives of the Central Bank of Nigeria (CBN) is to defend the Naira and one of the ways this is done is to put in place trade policies that regulate the access to and the utilisation of the foreign exchange both for visible and invisible transactions. The inflow and outflow of foreign exchange in Nigeria is tracked using different forms namely: Form M -The application form for the importation of visible goods into Nigeria. Form A - The application form for the payment of offshore services. Form NXP - The application form for the exportation of tangible goods out of Nigeria. CCI - Certificate of Capital Importation used to register important of funds into Nigeria. 

In regulating the access to the foreign exchange, the CBN put forward a policy that will enable her have access to the details (volumes and values) of non oil exportation out of the country. This policy state that anyone exporting any item out of the country should henceforth declare the NXP numbers on the Bill of Lading. This is a fantastic policy that should finally lay to rest the issue of non declaration of details of items being exported but this has not been the case because there seems to be no plan of action and strategy to implement and enforce this policy. 

In addition to this, my enquiry in the banking sector to check the level of compliance shows that some of the shipping lines seem to be depending on the exporters to provide the NXP numbers to be stated on the Bill of Lading. How do you explain a situation where an exporter brings a shipping document to the bank under a Bill for Collection or Letter of Credit transactions with a Bill of Lading that is containing an NXP number that is not in the bank's record. This can only be possible because the exporter has given a fake number to the shipping line. This is therefore making the policy to be useless because the CBN will still not be able to get the correct data of the goods being exported out of the country and therefore will be unable to track the expected export proceeds on the shipments. 

The exporters used to have reasonable reasons not to process NXPs for their export transactions when the exchange rate of Naira to 1 USD was over N400 leading to a very high cost of procurement of commodities and processing their goods. This is because opening NXP will mean that they have to bring in export proceeds into the export proceeds domiciliary account. This will consequently prevent the exporters from having access to the account and therefore unable to sell the USD at a better rate in the parallel market. They are therefore compelled to sell at the interbank rate which is very low and therefore resulting in a loss. 

This problem has since being solved by the governments through the introduction of the Investor & Exporters window for trading foreign exchange. As a matter of fact, the rate at this window is competing favourably with that if the parallel market. Hence, there is no logical reason for any exporter not to want to process NXP. The resulting losses on their export transactions which they use to give as excuse is no longer tenable. However, there are still some that refuse to declare the details of their shipments via NXP processing and this shows that they have other hidden agenda beyond their initial claim. This has necessitated the introduction of a new policy that requires the exporters to state their NXP numbers on the Bill of Lading. Despite the new policy, some exporters are still able to circumvent the new requirement because the way the government is going about the implementation of the policy is flawed. 

This problem can be solved easily in my opinion based on a good understanding of the pre-export documentation process and the export clearing process. In the pre-export documentation process, the exporter delivers his completed NXP form, proforma invoice, export license and certificate of incorporation to the bank. The bank, bank keeps the first original of the NXP and then sends the other 5 original NXPs together with other documents to the pre shipment inspection agent. This agent keeps the second original NXP and then transmits the other NXPs to government agencies like Nigeria Customs Service, Central Bank of Nigeria and Nigeria Export Promotion Council. From this process, it is very obvious that the officers of the Nigerian Custom Service have a copy of the original NXP from the bank. 

All the CBN needs to do is to collaborate with Customs and the shipping line in the implementation process. The CBN needs to agree with both organisations that a copy of the NXP endorsed by Customs must be part of the loading list transmitted to the shipping line after the goods must have been cleared for export. The shipping line must insist that it will only insert on a Bill of Lading, the NXP numbers stated on the copies of the NXPs received from and endorsed by Customs. The CBN should also inform the banks that if they receive any Bill of Lading with fake NXP numbers, this should be communicated to the CBN who will then inform the Customs headquarters to investigate and discipline the erring officer that made that to happen.

It is might firm believe that Nigeria can solve the problem of both non-declaration and under declaration of the items being exported out if the country. However, this can only be made possible if the CBN have a very firm handshake and synergy with the managements of all the relevant agencies at the ports.

Bamidele Ayemibo

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