Merit Ibe
The Manufacturers Association of Nigeria (MAN) has advised the Central Bank of Nigeria (CBN) to reverse its recent policy directing authorised dealers to desist from opening Forms ‘M’ whose payments are routed through a buying company/agent or any other third parties, in the overall interest of the manufacturing sector and the economy in general.
MAN President, Mansur Ahmed, gave the advice following the circular released by the apex bank in its resolve to ensure the prudent use of foreign exchange resources, eliminate incidences of over invoicing, transfer pricing, double handling charges and avoidable costs that are ultimately passed to the average Nigerian consumer.
By the policy, authorized dealers should only open Form M for Letters of Credit, Bills for collection, and other forms of payment in favour of the ultimate supplier of the product or service involved.
Form M is a mandatory document, meant to be completed by all importers of goods into Nigeria.
Ahmed, who applauded the good intention of the apex bank, explained that the impact of such decision was inimical to the survival of many manufacturing concerns that are not involved in any unethical practices especially at a time when the nation is implementing gradual ease of the lockdown due to COVID -19 pandemic.
“This additional hamstring on the economy is likely to erode the recent improved performance on the ease of doing business ranking.”
Noting that many companies have gone into contractual agreements via the procurement agencies for the 2020 financial year and, in some cases, beyond , he said any default on these contractual obligations may result in expensive lawsuits across jurisdictions, bring disruptions to the production process and further undermine the resilience of the manufacturing sector.
Consequently, the multiplier effect on the economy will be reduction in productivity, loss in business revenues, supply chain disruption and ultimately loss of employment.
The association explained that if the CBN is of the view that the audit of the activities of a central procurement agency, in terms of price verification, was impossible, a phased approach should be adopted to eliminate their use in Nigeria.
“This will enable companies have sufficient time to re-organise and build the required relationships with original suppliers which they do not currently have.”
To checkmate abuse, Ahmed advised the apex bank to put in place a monitoring mechanism framework to ensure that unverifiable claims by some manufacturers are identified and dealt with accordingly, rather than stifle the business of genuine manufacturers whose interest and commitment is to grow the economy.