Chief Executive Officer Centre for the Promotion of Private Enterprise CPPE Dr. Muda Yesuf has said that the recent introduction of Electronic Evaluator, E-Evaluator and Electronic Invoicing, E-Invoicing by the Central Bank of Nigeria [CBN], purportedly to curb foreign exchange malpractices should be wrapped immediately. In a statement signed by Muda he said “we recall that only last October, the Director General of the World Trade Organization, Dr[Mrs.] Ngozi Okonjo-Iweala expressed worry over the high trade cost in Nigeria, which she said was an equivalent of 306 per cent tariff, which is above the African average. She stated this while addressing the Mid-term Ministerial Performance review of the federal government.
“Her assertion summarises the harrowing experience of Nigerian investors in the international trade process. There are issues of overlapping regulation, excessive documentation, weak application of Technology, physical examination of cargo, extortion, inadequate cargo handling equipment, stifling bureaucracy, difficult transportation logistics, challenges of access to the ports and weak dispute resolution system. We should therefore be seeking to alleviate the pains of investors in the economy, not exacerbate to it. The E-invoice and E-evaluator policy will only worsen an already bad international trade transactions process. The policy will increase transaction cost, entrench red tape, increase uncertainty, escalate business disruption, weaken investors’ confidence and heighten corruption risk. The truth is that there is a strong correlation between red tape and corruption.
“The increasing incursion of the CBN into the trade policy space is an aberration in our economic management system and a serious cause for concern to the business community. Issues of import valuation and classification are statutory functions of the Nigeria Customs Service, with the Finance Ministry as the supervising organ. The decision of the CBN to now undertake valuation and product price benchmarking of imports and exports is a duplication of the statutory responsibility of the Nigeria Customs Service. It will create an additional regulatory compliance burden and costs for the business community. We therefore submit that the E evaluator and E invoicing initiatives be rescinded by the CBN. There is no compelling justification for their introduction in the first place. The CBN could collaborate with the Nigeria Customs to address any gaps in the valuation processes, rather set up a parallel institutional framework. Meanwhile, the CPPE commends the prompt intervention of the House of Representatives on the matter.
“The CPPE appreciates the concern of the CBN regarding malpractices in foreign exchange transactions. But the truth is that over eighty percent of these misconducts are outcomes of the current distortions created by the current foreign exchange policy regime, especially the administrative fixing of the exchange rate. A parallel market premium of about 40% offers an incredible incentive for round tripping, brokerage activities and all manner of abuses in the forex market. It is thus advisable to address the causes, rather than the symptoms of the problem. A market driven exchange rate will reduce, and possibly eliminate, these malpractices. Such a pricing framework will also reduce the distractions that the CBN has to grapple with on foreign exchange market challenges. The policy will increase transaction cost, entrench red tape, increase uncertainty, escalate business disruption, weaken investors’ confidence and heighten corruption risk. The truth is that there is a strong correlation between red tape and corruption. The increasing incursion of the CBN into the trade policy space is an aberration in our economic management system and a serious cause for concern to the business community. Issues of import valuation and classification are statutory functions of the Nigeria Customs Service, with the Finance Ministry as the supervising organ. The decision of the CBN to now undertake valuation and product price benchmarking of imports and exports is a duplication of the statutory responsibility of the Nigeria Customs Service. It will create an additional regulatory compliance burden and costs for the business community.
“We therefore submit that the E evaluator and E invoicing initiatives be rescinded by the CBN. There is no compelling justification for their introduction in the first place. The CBN could collaborate with the Nigeria Customs to address any gaps in the valuation processes, rather set up a parallel institutional framework. Meanwhile, the CPPE commends the prompt intervention of the House of Representatives on the matter.
The CPPE appreciates the concern of the CBN regarding malpractices in foreign exchange transactions. But the truth is that over eighty percent of these misconducts are outcomes of the current distortions created by the current foreign exchange policy regime, especially the administrative fixing of the exchange rate. A parallel market premium of about 40% offers an incredible incentive for round tripping, brokerage activities and all manner of abuses in the forex market. It is thus advisable to address the causes, rather than the symptoms of the problem. A market driven exchange rate will reduce, and possibly eliminate, these malpractices. Such a pricing framework will also reduce the distractions that the CBN has to grapple with on foreign exchange market challenges”.
