CBN e-invoice for import and export into Nigeria? The introduction of e-valuator, e-invoices into import and export trade by the Central Bank of Nigeria has raised more dust. Virtually everyone in the Nigerian import and export trade is worried. Cargo clearance agencies are concerned that this new system will further complicate Customs processes. Importers are concerned that the guideline will slow down the already painstaking process of cargo clearance. Goods suppliers into Nigeria’s space fear that the new policy will be costly and complex. Economic watchers are not happy; they feel that the ease of doing business is at risk. The Nigerian Senate and the National Assembly have expressed concern that the process is hasty.
Read Also: FORM M NIGERIA; HOW TO PROCESS AND OBTAIN IT
What exactly are we talking about here? What is the exact meaning of e-valuator, e-invoice? Why have these terms become a source of concern to all? Read on to the next few paragraphs as we make sense of what CBN actually mean. Thus, we will outline most of what you need to know about the e-invoice below.
WHAT IS E-INVOICE?
E-invoice is an abbreviation for electronic invoices. The electronic invoice is a digital document. It is an invoice processed, passed on, received and stored electronically in specialized document format. Thus, the invoice is structured and is importable electronically. With this background, let us move on to understand what the CBN is saying.
CENTRAL BANK OF NIGERIA AND E-INVOICING
Dr. O. S. Nnaji – the Director Trade and Exchange Department of CBN in a circular disclosed switch to the electronic invoice. The circular is with the date 21 January 2022 and to all authorized dealers and the public. Below is a bullet-by-bullet extract of the circular gist.
- All authorized dealers and the public are to take note of the introduction of e-valuator and e-invoice.
- The electronic invoice replaces hard copy final invoice as part of import and export documents.
- “Effective February 1, 2022, all import and export operations will require the submission of an electronic invoice.
- Electronic invoice will requires authentication by the authorized dealer banks on the Nigeria single window portal – Trade Monitoring System.
- This new regulation has primarily aim of achieving accurate value from import and export items in and out of Nigeria.
- The system will operate on a global price verification mechanism guided by a benchmark price.
- The benchmark price is the actual spot market price, obtainable at the time of consummation from the market.
FURTHERMORE, THE CENTRAL BANK SAYS:
- Products that are more than 2.5 per cent of the benchmark price will get query, and will not be successful in completion of Form M or Form NXP as the case may be.
- Importer/Exporter of goods into Nigeria must ensure that the purchase/sale contract with a foreign supplier/buyer stipulates compliance with the obligations set out in this regulation.
- Suppliers will submit electronic invoice, which requires authentication by authorized dealer bank as part of the documentation for payment.
- No Importer/Exporter may effect payment to the credit of any foreign supplier unless the electronic invoice authentication by authorized dealer banks presented together with the relevant document for payments.
- Authentication of vendors on the system comes at a cost of US$350 per year in subscription fees.
- In addition, CBN-designated service provider will send the e-invoices to the Nigerian Single Window Portal Trade Monitoring System.
- Printed version of the e-invoice will display a QR code to permit verification of authenticity online.
EXCEPTIONS TO CBN E-INVOICE
The Order by CBN exempts merchandise invoices with values less than $10,000 and it’s equivalent in other currencies. Nevertheless, if the Dealer has a cumulative annual invoicing value of $500,000, they are still subject to e-invoice processes. Notwithstanding the individual value of an invoice, those with annual turnover equal to or higher than $500,000, are not exempt.
Equally, goods imported or exported by Nigerian security agencies are exempt from the electronic invoicing order of the CBN. Furthermore, supplies to diplomatic missions and organizations relating to the United Nations are not subject to electronic invoicing.
Lastly, exempt are donations from foreign governments or international organizations to foundations and charities, and goods supplied by a foreign government.
WHAT STAKEHOLDERS SAY ON E-INVOICE POLICY
The House of Representatives has requested the Central Bank of Nigeria (CBN) to suspend the arranged execution of an electronic invoice. They think that the strategy is set up in hurry, and could twist the costs of the merchandise. The House further fears there could be logjams for imports and commodities, postponed exchanges and therefore ports blockage. Consequently, the lawmakers demanded the CBN to allow 90 days timeline for the new fiscal/monetary policy implementation. To the lawmakers, an allowance of 90 days will make room for adjustment to stabilize the economy.
Clearing Agents are of the view that the timeframe for implementation of electronic invoicing for imports and exports goods is hasty. They fear that the directive will affect negatively already negotiated trades. Additionally, many organizations of licensed Agents believe that the CBN has no such right to issue the directive on e-invoices. In a letter to the CBN Governor, The President, National Council of Managing Director of Licensed Customs Agents (NCMDLCA) say the order is a contravention of the Customs and Excise Management Act (CEMA).
CONCERNS ON CBN E-INVOICE BY THE MANUFACTURERS’ ASSOCIATION OF NIGERIA
The Manufacturers’ Association of Nigeria also thinks that the CBN should give 90 days window to allow participation by stakeholders. The association through her chairperson is worried that many would have opened Form M and closed some deals before now. Hence, the need for more time to allow for the importation of affected deals. They further expressed concern on the determination of global prices of commodities.
Let me quote the Director-General of MAN, Mr. Segun Ajayi-Kadir “Besides, we are worried about the determination of global price verification mechanism and benchmark prices. What happens if some companies are able to negotiate better prices due to their scale of order and are able to get competitive lower prices? Will these competitive prices be within the benchmark? Clearly, this aspect of the policy will lead to several challenges on valuation down the line including a floodgate of valuation issues with Nigeria Customs Service.”
WHAT WE THINK ABOUT THE CBN E-INVOICE
The order for electronic invoicing is novel. An adage in Nigeria says ‘it is difficult to determine a bad market in the morning.’ This is because factors of demand and supply could be different in the afternoon. Similarly, it is too early to conclude that the Apex bank of Nigeria is wrong in its policy of electronic invoicing.
A statement sent to Nairametrics by Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise and former President of the LCCI, read that the recent e-invoicing policy will worsen Nigeria’s already bad international trade transactions process, and increase transaction cost, amongst others. While we are not taking a stand for or against this new policy by CBN, we look at the above conclusion as hasty. We rather join the list of those calling for robust engagements, and for more time to allow stakeholders contributions.
If the primary purpose as stated is to curb crime, should CBN e-invoice be discouraged? What are your thoughts on the new e-invoice policy? Are you of the opinion that the advantages of e-invoice far outweigh the disadvantages? Alternatively, do you think otherwise? Share your thoughts in the comments section below. We will keep our readers up-to-date as the implementation unfolds.