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Nigerian apex bank tightens rules on forex

The apex Central Bank of Nigeria (CBN) and the Nigerian Shippers Council (NSC) are vigorously enforcing the bank’s new rules, which put stringent conditions for approving foreign exchange for commercial banks on behalf of their clients in the maritime sector, the local media reported Monday.

According to the apex bank, the new rules are designed to check capital flight and round tripping in the industry.

They compel shippers and commercial banks to provide verification certificates of the freight component of their transactions, without which the industry regulators (NSC) will no longer approve foreign exchange allocation for any bank on behalf of its customers (shippers).

A circular from the apex bank said the verification letter must be issued by the NSC.

“This is to inform all importers and exporters, commercial banks and the general public that it is the statutory duty of the Nigerian Shippers Council (NSC) to confirm the reasonableness of freight rate for all imports and exports to and from Nigeria,” CBN said in a statement, circulated to all stakeholders.

“In view of the above, all commercial banks, importers and exporters are advised to note this announcement and ensure they obtain confirmation letter on the reasonableness of freight rates from the NSC. This procedure henceforth forms part of the guidelines for the processing of imports and exports to and from Nigeria,” the statement added.

Since 2008, the apex bank has entered into a working relationship with the NSC to issue the verification certificates of reasonableness to shippers, in order to check capital flight and round tripping in the lifting of crude oil or refined petroleum products in and out of the country.

Then it was discovered that many shippers were hiding under freight payment to engage in illegal transfer of funds abroad.

But the CBN opted to continue with the NSC for the verification because it is the only agency statutorily empowered to regulate and protect the interest of Nigerian cargo owners.

Since the initiative took off, foreign exchange allocation from commercial banks for freight purposes have been turned down until the presentation of the verification certificate from the NSC.

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