The Central Bank of Nigeria (CBN) has extended the timeline for the issuance of Letters of Credit from 24 hours to five working days as foreign exchange (FX) scarcity continues to constrain business activities nationwide
Also, the apex bank extended the timeline for the registration of Form M and NXP from 24 hours to two working days.
In the approved Service Charter of the CBN, the timeline for the issuance and management of letters of credit was 24 hours for the importation of visible goods, a letter of credit is a mode of payment.
Based on a customer’s request, the apex bank promises in writing to pay the exporter a certain sum within a certain time frame in return for goods, as long as the customer provides the bank with the proper paperwork.
According to a statement from the CBN on the latest monetary requirements, to import goods denominated in foreign currency into Nigeria through the CBN Single window, all importers are required by law to fill out Form M. All exporters are required by law to fill out the Nigeria Export Proceed (NXP) Form before sending goods outside of the country.
Analysts believe that the current FX crisis in the country, in the face of inability of the Nigerian government to boost the nation’s exports, may have triggered the increase in the timelines for letters of credits, Forms M and NXP in the newly approved service charter by the Governor of the CBN, Yemi Cardoso.
The Service Charter, which is a prerequisite of the Business Facilitation Act 2022 enacted to promote the ease of doing business in Nigeria, mandates the apex bank to comply with SERVICOM’s directions on improving customer service delivery.
In the statement issued on Thursday, the pointed out that the Charter defined its working relationship with its external customers, adding that it reaffirmed CBN’s commitment to provide effective and timely service to its stakeholders and consumers.
In the Foreword to the revised document, Cardoso stressed the CBN’s commitment to providing more responsive and citizen-friendly governance through excellent, efficient, responsible, and transparent service delivery.
Despite the laudable intention of the CBN’s management, current realities continue to suggest that its desire for ease of doing business may not be quick in coming so long as the FX crisis persists.
It would be recalled that in June this year, the regulatory monetary institution announced the unification of all segments of the forex market, collapsing all windows into a single official window for FX transactions.
As already witnessed, due to a combination of other macroeconomic factors, the intention of the apex bank to drive liquidity and stability in the FX markets has not been realized given the instability in the market.
The sustained depreciation of the local currency in the FX market has affected local and international trade, especially the import of goods and services in the country, with the attendant negative implications for the general price level in the economy, amongst other headwinds.
