Summary

The Central Bank of Nigeria (CBN), through Circular No: TED/FEM/FPC/PUB/01/0 ("the Circular"), recently announced the introduction of an electronic system comprising of an e-valuator and e-invoice for import and export transactions. The e-valuator and e-invoice will now form part of the documentation required for all import and export transactions. Thus, all import and export operations in Nigeria will require the submission of e-invoices authenticated by the Authorized Dealer Banks (ADBs) on the Nigerian Single Window portal – Trade Monitoring System (TRMS) effective 1 February, 2022.

Details

In August 2020, the CBN issued a Circular which limited access to foreign exchange (FOREX) to only transactions between local Nigerian businesses and the Ultimate Product Supplier (UPS) upon furnishing the required documentation and meeting the requirements as stated in the Circular. The Circular aimed at eliminating the impact of buying houses and agents on the demand for the nation's limited FOREX reserve.

The CBN, through its recent Circular, has now taken a further step in intensifying its efforts to ensure prudent use of the country's FOREX resources by the introduction of the electronic and automated platform.

According to the Circular, the new electronic system of invoicing would operate on a global price verification mechanism guided by a benchmark price and will assist in achieving accuracy in the value of imported and exported items in and out of Nigeria. The Circular, which is effective 1 February, 2022, provides certain specific guidelines to the use of the e-invoice.

Extracts from the Circular read:

  • An importer/exporter of goods into Nigeria shall ensure that the purchase/sale contract with a foreign supplier/buyer stipulates compliance with the obligations set out in this Regulation and that the supplier's/seller's invoice must be submitted in electronic format and authenticated by the ADB as part of the documentation for payment;
  • No importer/exporter may effect payment to the credit of any foreign supplier unless the electronic invoice has been authenticated by the ADB presented together with the relevant documents for payment;
  • A supplier/buyer of goods or services for import/export operations into or out of Nigeria is required to register on a dedicated electronic portal provided by the CBN and operated by CBN's agent service providers as in the operational manual for FORM M and Form NXP e-Invoicing.

The Circular further provides that where the unit prices quoted for items is 2.5% higher than the verified global benchmark price, a query will be issued and the completion of Form M or Form NXP as the case may be disallowed. Also, an annual subscription of $350 is charged per authentication of suppliers on the TRMS.

The Circular however exempts the following import and export operations from the submission of e-invoices:

  • Individual invoices with a value less than $10,000 or its equivalent in another currency. However, where the suppliers have a yearly cumulative invoicing value of $500,000, they are required to submit e-invoices for all their operations notwithstanding the individual value of an invoice;
  • Import and export transactions made by all security agencies in Nigeria;
  • Supplies to diplomatic and consular missions and other international agencies dependent on the United Nations;
  • Donations made by foreign governments or international organisations to foundations, charities and recognized humanitarian organisations;
  • Goods directly supplied by a foreign government.

Implication

The objectives for the introduction of an electronic system for imports and exports by the CBN, as stated, are laudable as it is expected to encourage prudent use of the limited FOREX reserve and maximize FOREX earnings. The CBN may want to consider a phased introduction to help identify potential challenges and grey areas that may inhibit trade. In the light of this development, businesses need to evaluate the impact of this Circular on their existing contracts with their suppliers amongst other business consideration(s) that the Circular may not envisage.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.