Wetin concern me, as long as u don’t tackle corruption within the political circle, the dollar will always go up because politicians are the biggest costumers of the black market cause they can’t legitimately approach the banks with their stolen money. By the way, why do we even need black / parallel market for dollars, is it to create jobs for some people?
Why does it need to borrow dollar if it doesn't need to print more money to stabilize the currency. Too much money doesn't mean it is in the wrong hands, it is simply in where it is supposed to be that's why the CBN was established . There are many times when the naira is in shortage for trade even the lower denomination. There is no point transacting with dollars in Nigeria because it will lead to high dollar demand and a diverging currency. Remember not printing enough money means devaluing the currency as some notes becomes worn out if you understand economic, shortage of transaction and when the lower currencies is in obsolete, the manufacturing industries won't produce goods for that worth as an example and even local traders and manufacturer gets shortage of resources and money will generally not be in circulation.
Your understanding of Nigeria's economy is depressingly shallow. If you're put in the position to oversee the affairs of this country, our economy would be on its knees in 2 months.
This is false. Even in the US, prices of commodities vary according to locations please. The variations are however within a certain price basket regulated by the requisite agency so as to prevent indiscrimate price inflations which leads to public exploitation.
That effective regulation is what's lacking in Nigeria.
Your reply doesn't still negate his point. Nigerians aren't patriotic!
That's your own is most evil and unpatriotic statement in the political space. Election is over Please stop your toxic and hate speech .It depicts depravity and barbaric behavior in a sane society!
Your reply doesn't still negate his point. Nigerians aren't patriotic!
Humans are the same everywhere. Location irrespective, every person who sees a way to make an extra buck will take it, not minding if he inconveniences another in the process. Business owners in the US will inflate prices of goods if they can do so, only the presence of the regulating agency, prevents them.
The average American will ignore traffic lights 60% of the time if allowed to. But the penalties given to traffic offenders by the relevant authorities are enough to keep everyone in check.
It's not always about the Nigerian people. Our institutions are just failing in their responsibilities.
ImDStar: The illegitimate man must be ousted out. Illegitimate person cannot birth legitimate government. That's my own.
The illegitimate man indeed according to the third class candidate supporters...who are desperately desperate to rule the same country they have been calling a Zoo for donkey years.... We don't make noise...just remind them that..
Your understanding of Nigeria's economy is depressingly shallow. If you're put in the position to oversee the affairs of this country, our economy would be on its knees in 2 months.
You have no business being on the internet, you are so full of deception. I believe you finished off from primary school after learning sentences and believe you are worth arguing topics you have no experience about. You think economy starts and end in the office or your bedroom. Fyi economics was my best subject in school and I got A results from it so specifically i know what am talking about. All what you sat on your keyboard to argue is don't bring in economic and production, dollar values will automatically boost the economy with no consideration for economic chain.
The Central Bank of Nigeria is set to launch its Price Verification Portal on August 31 2023.
Please read this explainer written in 2021, some elements may have been changed or updated, but the broad idea remains.
Understanding CBN’s new guidelines on import and export financing
The Central Bank of Nigeria's (CBN) new import and export financing guidelines via an eValuator system are set to effect on February 1, 2022. So, let's talk about it.
Introduction of the Policy
The Central Bank of Nigeria's new guideline on imports is based on the electronic submission of invoices called e-vouchers. This new guideline is mandatory for all imports above $10,000. These new e-Vouchers will be issued and authenticated by Authorized Dealer Banks (ADBs).
Importers of any good or service into Nigeria must register that good or service supplier into an electronic database. This database is updated annually. The importer of any good or service will then submit import papers to complete a Form M. Still electronically, the price the importer will quote will be based on a "Global Price Verification Mechanism (GPM) guided by a benchmark price. The GPM will advise a benchmark price for all goods and services, which is the actual spot price advised to the importer by the supplier.
The Benchmark Price
The new guideline revolves around this benchmark price. If the supplier wishes to import, his quoted price on the invoice presented to his bank (ADB) should be at most 2.5% of the verified global benchmark price. If the quoted price exceeds 2.5%, Form M will be queried and not processed in Form M or NXP. It is the responsibility of the importer to ensure that their supplier complies.
Let me summarize this way. If you intend to import a BMW 5 Series car from BMW of Atlanta, these are the steps under the guideline.
1. Go to BMW of Atlanta, and obtain an Invoice. 2. BMW of Atlanta will register on a dedicated electronic portal provided by CBN but operated by the CBN agent service provider. This registration will cost $350 and be valid for 12 months. 3. The CBN's service provider will issue BMW of Atlanta a digital certificate. BMW of Atlanta will sign your eInvoice with this digital certificate. 4. BMW of Atlanta will provide the authenticated eInvoice to you 5. The CBN's service provider will transmit the BMW eInvoice to CBN, specifically the Nigeria Single Window Portal Trade Monitoring System (TRMS)
If the BMW of Atlanta quoted price for your BMW 5 series is more than 2.5% of the benchmark price, then your Form M will not be processed.
This guideline also applies to exports; the critical difference for exporters is that the exporters from Nigeria are quoting a price as the supplier. They must quote within a 2.5% band as well.
Thus, if I am a Cassava chip exporter and get an order from China, I cannot quote a selling price below 2.5% of the benchmark cassava chip price as CBN advised. This is an important distinction. Now, let us talk about the exchange rate mechanism in Nigeria.
Why is Exchange Rate Important?
When you import, you are buying Forex; in effect, you are taking Forex away from Nigeria; you "weaken" the Naira. When you export, you bring Forex into Nigeria and "strengthen" the Naira.
The CBN and all Central banks always promote exports; however, not all Central Banks want a strong currency. Strong export economies such as China, Germany, Switzerland, and Japan prefer a weaker currency to ensure their exports are competitive. The CBN's goal is to have a "strong" Naira to the US Dollar by words and deeds. The CBN has defended the Naira exchange value in relation to the US Dollar to ensure it does not weaken further. The CBN is rightly wary of imported inflation.
Nigeria, however, is also an exporting nation, she exports Crude oil, Cocoa, Cashews, and many other commodities, but Nigeria's CBN also has a Capital Control policy. This means the inflow and outflow of foreign capital in and out of Nigeria is controlled and regulated. The CBN sets the Exchange rate of the Naira to the dollar, not the interplay of Demand and Supply. Thus, Nigeria has two rates, the official NAFEX rate, which exchanges $1 to about N414 and the unofficial rate at about $1/550.
The Export v Import Gambit
Many exporters from Nigeria are willing to sell their local commodities at a discount to the international commodities market because this attracts international buyers. They, however, do not remit their Forex to the official channels but rather to the unofficial market to take advantage of the higher exchange rate. So, exporters can earn more from the arbitrage in selling USD to the unofficial market.
The CBN has a standing policy that exporters must repatriate all exports within 90 days for oil and gas transactions and 180 days for non-oil exports. The CBN had in January 2021 instructed banks to prohibit Nigerian exporters that fail to repatriate Forex earnings from banking services with effect from January 31, 2021.
CBN has tried sticks of sanctions and carrots of paying N5 per deposit to encourage the repatriation of proceeds back to Nigeria, but this has not succeeded. This policy is an export-import gambit. The exporter will have to invoice at the benchmark prices, enabling them to earn more from the export side by selling at higher prices. Still, they will then remit Forex at the lower exchange rate.
The CBN objective of a "strong" Naira is thus affected by the low foreign reserves it must defend the Naira. The low reserves are a function of the non-remittance of export proceeds promptly as well as a fall in remittances generally.
Exports win, Imports lose?
This new e-Voucher guideline raises commodity prices in Nigeria. It removes the advantage of lower prices from Nigerian exports, but more remittances should flow to the CBN. Importers have a more challenging time.
However, is the 2.5% not too narrow a band? When you buy a BMW in Atlanta, three main factors drive your selling price.
1, Cost price, how much is the car worth? 2. Your profit margin, how much do you want to make? 3. Inflation expectation, what will it cost you to replace your stock?
The BMW from Atlanta is sold in United States Dollars; however, you are importing to sell in Nigeria for Naira. According to the CBN, the OTC FX Future dollar rates to Naira for delivery in May 2022 show a further weakening of the Naira to N432.32. The futures price is thus my replacement cost in 5 months. Therefore, all traders add a margin that captures this inflation expectation. The language in the CBN circular explicitly suggests that the margin is a firm 2.5%; it implies ignoring the inflation reality. Many importers will no longer open Form M, finance their imports, or change destination ports.
However, this policy has some good points; it allows the CBN to have a database of importers and import requests. Every time a new supplier registers, it's a trade forecast for the CBN. It is an early notice to the Central Bank of Nigeria that it must have forex reserves to meet that Forex demand. This will allow more long-term planning and management of the reserve position. It will also remove the fraudulent request for FOREX on non-existent trades and overall reduce slippage.
Let me help you explain! The price of a microwave radio link is $25,000(Huawei) the directors, owners and few politicians in the top management of the company need to move $100million combined to offshore account. They ask the telecoms company to quote each radio at $100,000 instead of $25,000 so we have difference of $75,000 per radio . Now the telecom company orders for 1000 radio links in a so called network expansion . $75,000 X 1000 radio links is $ 750million. That money does not belong to one person but to the cabal that runs the telecom company. So they negotiate with the oversees supplier to move the excess money to offshore accounts on their behalf. Remember it's CBN rate . Some of the cabal members can send their part of the deal to the black market in Nigeria and build 6 extra houses. Hope you understand
Opmic: It take high level of intellect to understand this memo. While this is good in an academic environment, a government should strive to communicate with it's citizens as clear as possible. No employ people to complicate simple idea
the letter was not for the general public, any what the new system is to capture in real time the value of Naira against the dollar in any moment you want to buy the dollar because that's the only time you fill the form M, and that's what it's used for.
Panda7: CBN needs to print more currency, stop direct dollar transaction within Nigeria every transaction must be in naira unless electronic transaction and improve export, that way there is no demand for dollar, the naira becomes stable and a high inflow of forex.
they tried that in 2015 I lost my business because of that policy, it failed woefully, no way you can stop cash dollars from coming into the Nigerian economy, that time the loop hole was that some smart people open various accounts, collect so many people atm cards, travel to Dubai and every day dey withdraw $100, after the have bought the $ at official rates "electronically" they now transfer to other peoples account as much as 50 to 100,thats least $5000 daily, after a week or two they jump into the plan and head back to Nigeria, sell at the black market rate.. They made a killing.. While I lost over 7 million naira business that time has $ went from 157 to 210 I think that time. My brother in short that your method won't work.. Until they just abolish the I & E windows and buy and sell at parallel market rate.. All this they are doing is just to post pone the evil day
masseratti: they tried that in 2015 I lost my business because of that policy, it failed woefully, no way you can stop cash dollars from coming into the Nigerian economy, that time the loop hole was that some smart people open various accounts, collect so many people atm cards, travel to Dubai and every day dey withdraw $100, after the have bought the $ at official rates "electronically" they now transfer to other peoples account as much as 50 to 100,thats least $5000 daily, after a week or two they jump into the plan and head back to Nigeria, sell at the black market rate.. They made a killing.. While I lost over 7 million naira business that time has $ went from 157 to 210 I think that time. My brother in short that your method won't work.. Until they just abolish the I & E windows and buy and sell at parallel market rate.. All this they are doing is just to post pone the evil day
Apart from selling currency, which other commodity market do you need dollar to operate?. And about people's money getting lost in their account, that's a cyber security breach that should be reported to your bank immediately besides the hacker will need your pin and password to access your bank. My question is why do people need to buy and hoard the dollar notes when they are not buying any goods if it is not another fraudulent scheme to carry out fraudulent activities. Buying bank notes should have long been abolished to avoid inflation besides it adds no economic advantage or payment of tax other than devaluing the naira currency.
Apart from selling currency, which other commodity market do you need dollar to operate?. And about people's money getting lost in their account, that's a cyber security breach that should be reported to your bank immediately besides the hacker will need your pin and password to access your bank. My question is why do people need to buy and hoard the dollar notes when they are not buying any goods if it is not another fraudulent scheme to carry out fraudulent activities. Buying bank notes should have long been abolished to avoid inflation besides it adds no economic advantage or payment of tax other than devaluing the naira currency.
i didn't lose money to any hacker, CBN stop receiving cash or paying put cash in $ to anyone, you have to do all transactions by electronic transfers, that led to spike in rate, and I lost money buying $ and selling $ because of their policy that time.. Alot of people went out of business, people couldn't pay school fees abroad until govt CBN revised it self like 6 months later. As to your question.. It's just to make profit that's all.. Same way you see fuel black marketers making their margins, that's d same way people hoarding $ also operate.
The Central Bank of Nigeria is set to launch its Price Verification Portal on August 31 2023.
Please read this explainer written in 2021, some elements may have been changed or updated, but the broad idea remains.
Understanding CBN’s new guidelines on import and export financing
The Central Bank of Nigeria's (CBN) new import and export financing guidelines via an eValuator system are set to effect on February 1, 2022. So, let's talk about it.
Introduction of the Policy
The Central Bank of Nigeria's new guideline on imports is based on the electronic submission of invoices called e-vouchers. This new guideline is mandatory for all imports above $10,000. These new e-Vouchers will be issued and authenticated by Authorized Dealer Banks (ADBs).
Importers of any good or service into Nigeria must register that good or service supplier into an electronic database. This database is updated annually. The importer of any good or service will then submit import papers to complete a Form M. Still electronically, the price the importer will quote will be based on a "Global Price Verification Mechanism (GPM) guided by a benchmark price. The GPM will advise a benchmark price for all goods and services, which is the actual spot price advised to the importer by the supplier.
The Benchmark Price
The new guideline revolves around this benchmark price. If the supplier wishes to import, his quoted price on the invoice presented to his bank (ADB) should be at most 2.5% of the verified global benchmark price. If the quoted price exceeds 2.5%, Form M will be queried and not processed in Form M or NXP. It is the responsibility of the importer to ensure that their supplier complies.
Let me summarize this way. If you intend to import a BMW 5 Series car from BMW of Atlanta, these are the steps under the guideline.
1. Go to BMW of Atlanta, and obtain an Invoice. 2. BMW of Atlanta will register on a dedicated electronic portal provided by CBN but operated by the CBN agent service provider. This registration will cost $350 and be valid for 12 months. 3. The CBN's service provider will issue BMW of Atlanta a digital certificate. BMW of Atlanta will sign your eInvoice with this digital certificate. 4. BMW of Atlanta will provide the authenticated eInvoice to you 5. The CBN's service provider will transmit the BMW eInvoice to CBN, specifically the Nigeria Single Window Portal Trade Monitoring System (TRMS)
If the BMW of Atlanta quoted price for your BMW 5 series is more than 2.5% of the benchmark price, then your Form M will not be processed.
This guideline also applies to exports; the critical difference for exporters is that the exporters from Nigeria are quoting a price as the supplier. They must quote within a 2.5% band as well.
Thus, if I am a Cassava chip exporter and get an order from China, I cannot quote a selling price below 2.5% of the benchmark cassava chip price as CBN advised. This is an important distinction. Now, let us talk about the exchange rate mechanism in Nigeria.
Why is Exchange Rate Important?
When you import, you are buying Forex; in effect, you are taking Forex away from Nigeria; you "weaken" the Naira. When you export, you bring Forex into Nigeria and "strengthen" the Naira.
The CBN and all Central banks always promote exports; however, not all Central Banks want a strong currency. Strong export economies such as China, Germany, Switzerland, and Japan prefer a weaker currency to ensure their exports are competitive. The CBN's goal is to have a "strong" Naira to the US Dollar by words and deeds. The CBN has defended the Naira exchange value in relation to the US Dollar to ensure it does not weaken further. The CBN is rightly wary of imported inflation.
Nigeria, however, is also an exporting nation, she exports Crude oil, Cocoa, Cashews, and many other commodities, but Nigeria's CBN also has a Capital Control policy. This means the inflow and outflow of foreign capital in and out of Nigeria is controlled and regulated. The CBN sets the Exchange rate of the Naira to the dollar, not the interplay of Demand and Supply. Thus, Nigeria has two rates, the official NAFEX rate, which exchanges $1 to about N414 and the unofficial rate at about $1/550.
The Export v Import Gambit
Many exporters from Nigeria are willing to sell their local commodities at a discount to the international commodities market because this attracts international buyers. They, however, do not remit their Forex to the official channels but rather to the unofficial market to take advantage of the higher exchange rate. So, exporters can earn more from the arbitrage in selling USD to the unofficial market.
The CBN has a standing policy that exporters must repatriate all exports within 90 days for oil and gas transactions and 180 days for non-oil exports. The CBN had in January 2021 instructed banks to prohibit Nigerian exporters that fail to repatriate Forex earnings from banking services with effect from January 31, 2021.
CBN has tried sticks of sanctions and carrots of paying N5 per deposit to encourage the repatriation of proceeds back to Nigeria, but this has not succeeded. This policy is an export-import gambit. The exporter will have to invoice at the benchmark prices, enabling them to earn more from the export side by selling at higher prices. Still, they will then remit Forex at the lower exchange rate.
The CBN objective of a "strong" Naira is thus affected by the low foreign reserves it must defend the Naira. The low reserves are a function of the non-remittance of export proceeds promptly as well as a fall in remittances generally.
Exports win, Imports lose?
This new e-Voucher guideline raises commodity prices in Nigeria. It removes the advantage of lower prices from Nigerian exports, but more remittances should flow to the CBN. Importers have a more challenging time.
However, is the 2.5% not too narrow a band? When you buy a BMW in Atlanta, three main factors drive your selling price.
1, Cost price, how much is the car worth? 2. Your profit margin, how much do you want to make? 3. Inflation expectation, what will it cost you to replace your stock?
The BMW from Atlanta is sold in United States Dollars; however, you are importing to sell in Nigeria for Naira. According to the CBN, the OTC FX Future dollar rates to Naira for delivery in May 2022 show a further weakening of the Naira to N432.32. The futures price is thus my replacement cost in 5 months. Therefore, all traders add a margin that captures this inflation expectation. The language in the CBN circular explicitly suggests that the margin is a firm 2.5%; it implies ignoring the inflation reality. Many importers will no longer open Form M, finance their imports, or change destination ports.
However, this policy has some good points; it allows the CBN to have a database of importers and import requests. Every time a new supplier registers, it's a trade forecast for the CBN. It is an early notice to the Central Bank of Nigeria that it must have forex reserves to meet that Forex demand. This will allow more long-term planning and management of the reserve position. It will also remove the fraudulent request for FOREX on non-existent trades and overall reduce slippage.
We shall revisit this policy.
Thanks for this wonderful explanation. God bless you abundantly in Jesus name.
masseratti: i didn't lose money to any hacker, CBN stop receiving cash or paying put cash in $ to anyone, you have to do all transactions by electronic transfers, that led to spike in rate, and I lost money buying $ and selling $ because of their policy that time.. Alot of people went out of business, people couldn't pay school fees abroad until govt CBN revised it self like 6 months later. As to your question.. It's just to make profit that's all.. Same way you see fuel black marketers making their margins, that's d same way people hoarding $ also operate.
Did you say CBN stopped all banks from receiving dollars? Buying and selling and receiving dollar notes without a mobile app should be an illegal transaction. The high unstable conversion rate are caused by people who buy the dollar notes.
[quote author=ImDStar post=125186627]The illegitimate man must be ousted out. Illegitimate person cannot birth legitimate government. That's my own.[/quote u be mumu
