Why did the CBN introduce a new trade policy?
It’s not easy to do business in Nigeria.
You are either dodging an increase to your cost of already expensive inputs, or erratic government policies. Take the 2020 okada ban in Lagos as an example. Prior to the ban, the mobility startup, Gokada, was gearing up for expansion across Nigeria and had built a fleet of over a thousand motorcycles. Luckily, they were able to pivot, but they shouldn’t have had to do so because of a disruptive state government.
Some takeaways:
-
The CBN’s recently launched e-invoicing policy aims to solve the problem of undervalued exports and inflated imports.
-
Although the policy aims to improve foreign exchange earnings from trade, it ignores the issues like quality and cost of transportation, making imports more expensive and exports cheaper than global market prices.
-
Nigeria is already known for its trade tariffs being significantly higher than the African average. With this new policy, the cost of trading with Nigeria will increase significantly.
You can find many examples similar to this across different sectors. Either the Central Bank of Nigeria (CBN) is freezing the bank accounts of wealthtech apps or placing a ban on foreign exchange sales to Bureau de Change (BCDs). The list goes on and on. Government regulation is a constant threat whether your company is tech-enabled or operating in the real economy.
So it’s hardly surprising that when businesses hear that another CBN circular is making its rounds, people become worried about the possible uncertainty it brings. That’s what happened when the CBN’s Trade and Exchange Department announced the recent e-invoicing policy. According to the communique, international traders (importers and exporters) with invoices worth $10,000 would be required to submit an electronic invoice online. This directive is to ensure that the values on the goods coming in and out of Nigeria are bought and sold at the right market price.
Basically, anyone who wants to import or export goods worth more than $10,000 has to submit their invoice on the CBN’s platform to check if the value of the goods traded is within the range of the international market price.
For exporters, if the value of their goods is less than 2.5% of the market price, the Form NXP
Invest with Confidence, Operate with Precision.
Access economic and industry data & insight for global organisations.
Trusted by leading global organisations
