Central Bank of Nigeria - Import Trade Transactions in Nigeria

Import Trade Transactions in Nigeria

Inspection of Goods:

After several years of Pre-shipment Three (3) Service Providers were appointed with one service provider on the interface of the DI and ouster data. Inspection spanning over two decades, Government re-introduced Destination Inspection (DI) Scheme with effect from January 2006. The Destination Inspection Scheme is anchored on a 7-year Build-Own-Operate and Transfer ( BOOT ) arrangement involving three Scanning and Risk Service Providers (SRSP); while a fourth company provides an interface between the service providers and the Customs, based on the United Nations Conference on Trade and Development(UNCTAD) software, known as Automated System of Customs Data Analysis (ASYCUDA) ++.

The Scanning and Risk Service Providers (SRSP) are listed below:

Cotecna Destination Inspection Services Ltd

Societele Generale De Surveillance(SGS) Ltd Globascan Nig. Ltd Webb Fontaine Nig. Ltd(providing an interface between the Customs and the DI Service Providers)

Allocation of Sea Ports to the DI Service Providers:

The ports were allocated to the DI Agents in the following order:

Cotecna Destination Inspection Services Ltd

S/N

SEAPORT

AIRPORT

LAND BORDER

1

Apapa

Abuja

Banki

2

Tin-Can Island

Kano

Jibiya

Societe Generale De Surveillance(SGS) Ltd

S/N

SEAPORT

AIRPORT

LAND BORDER

1

Onne

Port Harcourt Airport

Idiroko

2

Port Harcourt

Global Scansystem Ltd

S/N

SEAPORT

AIRPORT

LAND BORDER

1

Warri

Murtala Muhammed Int.l Airport Cargo

Seme Border

2

Calabar

Grimaldi Concession Terminal was added to lot three with effect from December 2006.

Risk Assessment Reports (RAR) is issued on the basis of inspections carried out on imports.

Update on ASYCUDA Implementation

The Customs processes in some major Nigerian ports have been automated by the deployment of the ASYCUDA software e.g. Apapa, Tin-Can and Murtala Mohammed International Airport, Lagos .

Import procedures:

Import procedures have been simplified to facilitate trade. Any person intending to import physical goods into the country shall in the first instance process Form ‘M' through an Authorised Dealer Bank irrespective of the value and whether or not payment is involved.

The Form M for general merchandise has an initial validity period of six months for all imports except plants and machinery which has a validity of one year. Initial revalidation of the Form M shall be handled by the Authorized Dealer Bank without recourse to the Central Bank.

Appropriate import duties are paid in respect of imports to the Bank that established the Form ‘M'.

Further details on documentation for importation into Nigeria shall be obtained from the Authorised Dealer Banks.

Structure Of Nigeria's Foreign Exchange Market We have witnessed a remarkable improvement in the exchange rate of Naira over other exchangeable foreign currencies of the world. Since 1986 following the introduction of Structural Adjustment Programme (SAP) to date, the exchange rate has moved from regulated, guided deregulation and deregulation. This is because the world has globalised where best practices are being adhered to.

Before the reintroduction of Dutch Auction System (DAS) on July 19, 2002, the objective of which includes:

the determination of the exchange rate of the Naira through interplay of demand and supply; conserve external reserve position; reduce to the barest minimum the premium between official rate and that of the parallel market and or the bureaux de change (BDCs); iv. ensure stability of the naira exchange rate. A review of DAS performance from July 19, 2002 to February 17, 2006 as it relates to the objectives, showed that it has achieved substantial aspect of the objectives as follows:

Premium between the CBN rate and that of bureaux de change (BDCs) and the parallel market was N16.8199/$1 and N16.3505/$1 respectively in early 2002. The situation improved to N7.3471/$1 and N6.8741/$1 by December, 2004. From a reserve position of US$8.0 billion in 2002, the country has as at end January, 2006 the sum of US$30.0 billion in the reserve- over 300% increase and about 30months of import level.

The exchange rate has been stable since the commencement of DAS particularly in the year 2004. Year 2004 opened with a rate of N137.00/$1 and closed with an exchange rate of N132.85/$1, indicating an appreciation of N4.15 (or 3.03%). There was further improvement in 2005 as the naira appreciated by 2% from N132.00/$1 to N129/$1 as at end December, 2005.

The Dutch Auction System (DAS) has succeeded in checking and reversing the pressure on the external reserve position since genuine demands were met. DAS succeeded in encouraging professionalism and transparency in foreign exchange transactions. This is because there is discipline among the end-users as they pay according to their bids. They are more careful and realistic in their bids, thereby encouraging stability and discourage speculation in the market. The achievements recorded under DAS regime could be attributed to the following

improvement in the external reserves position of about US$20.0 billion as at December, 2004 which has increased to US$30.0 billion at the end of January, 2006. Greater autonomy of the CBN and its increased discretion in deployment of instruments of monetary control to support DAS. emergence of an inter-bank market for foreign exchange which stabilized supply gaps between auctions. Reduction in inflationary pressures, for instance, as at the end of December, 2004, inflation rate was about 9.5% as against 23.8% recorded at end period 2003. Disciplined fiscal operation particularly in year 2004. During the year 2005, there were special auctions offered in the market.

The special auctions were done to fast track the implementation of Wholesale Dutch Auction in which the offers were sold to the Authorized dealers on their accounts. The special auctions which started during August 2005 succeeded in revaluing the Naira exchange rate.

Wholesale Dutch Auction System (WDAS) was introduced on the February 20, 2006 replacing the retail DAS. The difference between the retail DAS and WDAS are as follows:

under the retail DAS, end-users were allowed to bid through their banks. under the WDAS, Authorised Dealer banks, bid on their accounts and the successful banks would then sell to their customers. As a result of successful consolidation of bank, the number of banks have reduced from 89 to 25 banks. That means only successful banks among the 25 banks would buy up the foreign exchange offered to the market. The exchange rate under the new WDAS has stabilised and continued to improve the operations of the foreign exchange market. As at Monday March 20, 2006 the exchange was N128/$1.

Export Trade The department ensures that non oil exports are encouraged. The value of export proceeds repatriation is captured. The repatriation and its utilization in the domiciliary account has been liberalized with reference to Circular on Modification of Export Domiciliary Account Operations and Transport Mode for Exports dated January 19, 2006, empowers Account holders to appropriate in any way he/she deems fit. This arrangement is to enhance foreign exchange supply to small-end users This is in line with government economic reforms.

Import Trade Transactions

Another development is the newly introduced Destination Inspection Scheme which is to replace the old arrangement of Pre-shipment Inspection Scheme (PIS). With effect from January 1, 2006, the Federal Government introduced Destination Inspection to replace the Pre-shipment Inspection which had been in operation for over 25 years.

Under the Pre-shipment Inspection (PI), Pre-shipment Inspection Agents (PIAs) under take the inspection of goods imported into the country. The designated inspection agents were:

SGS Swede Control Intertek and Cotecna. The Pre-shipment Inspection Agents were contracted by the Federal Government of Nigeria to examine the quality, quantity and value of goods imported into the country.

The economic reform embarked upon by the Federal Government informed the new transition to Destination Inspection Scheme (DI).

Under the Destination Inspection Scheme (DI) Scanning Companies (SC) have been appointed to replace the Pre-shipment Inspection Agents (PIAs). The three (3) companies are:

Cotecna SGS; and Globascan. The Scanning Companies generate Risk Assessment Report (RAR), which evaluates the level of risk involved vis-à-vis the importer, exporter, types of goods, country of supply etc. and then determines the level of inspection required. The RAR is an input document to the actual inspection process.

Nigeria Customs Service (NCS) analyses the RAR and takes a final decision on level of inspection required - (a) inspection is then carried out where required and the Assessment Notice (AN) is printed; (b) importer collects a copy of the (AN), which is used to pay for import duty and other taxes.

The functions of the Department is dynamic, as most of the operations impact on the economy at large.