CBN Involvement In Trade Policies Creating Problems, Says, Muda Yusuf
The Chief Executive Officer (CEO) of
Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf
has asked the Central Bank of Nigeria (CBN) to withdraw from all trade policies and leave them to the assigned agencies and ministries with such statutory roles.
He said the trio of Nigeria Customs Service, Federal Ministry of Finance, Ministry of Industry, Trade and Investment are duly created to conceive and implement trade policies
The apex bank had introduced an e-invoice and re-evaluation policy in a bid to digitalise the international trade processes
However, Yusuf noted that the involvement of the CBN in current trade policy issues was not only bringing the conflict in economic management issues in the country but also creating a lot of problems for investors, driving them away from the Nigerian economy.
Yusuf told our correspondent in Lagos that leveraging technology would normally boost efficiency and enhance productivity.
He said: “This initiative has generated concerns among stakeholders in the international trade process because of the disruption caused by lack of improper coordination between the CBN and the Nigeria Customs Service, Ministry of Finance, Ministry of Industry, Trade and Investment on the introduced e-invoice and e-evaluation policy.
Yusuf pointed out that the e-invoice and e-evaluator policy would worsen an already bad international trade transactions process in the areas of increased transaction cost, entrenching red tape, increasing uncertainty, escalating business disruption, weakening investors’ confidence and heightening corruption risk.
The CPPE chieftain stressed there is a strong correlation between red tape and corruption. He added that the increasing incursion of the CBN into the trade policy space is an aberration in Nigeria’s economic management system and a serious cause for concern to the business community.
According to him, “issues of import valuation and classification are statutory functions of the Nigeria Customs Service, with the Finance Ministry as the supervising organ. The decision of the CBN to now undertake valuation and product price benchmarking of imports and exports is a duplication of the statutory responsibility of the Nigeria Customs Service. With this, it will create an additional regulatory compliance burden, bureaucracy and costs for the business community.
“On the e-invoicing, re-evaluation policy as a role of the CBN. You see, we have a monetary policy we have a trade policy we have an exchange rate policy. The responsibility of the CBN as stipulated in the CBN Act is essentially about monetary policy, addressing issues of interest rate, issues of money supply, and focusing on price stability. When we talk about price stability we are talking about using the instrument of monetary policy to stabilize prices. That is why we talk about this Liquidity Ratio, Cash Reserve Requirements and all of that. If there is an instrument of monetary policy that the CBN uses.
“That is the main responsibility of the CBN. It is not the responsibility of the CBN to now go and be valuing imports to be determining how much the value of a product is, determining the invoice, it’s a major distraction. The Nigeria Customs Service has a whole Department of Valuation.
“So, if there is anything they are not doing well, the CBN can collaborate with them they are all government agencies, they are working for the same objective, they have the same principals, and they can collaborate to identify whatever gaps there are in the area of valuation, invoicing and all of that.
“But let me say this, all this malpractice in the foreign exchange market, over-invoicing and all of that, is because the foreign exchange market itself, is creating a problem. It is when some people want to round trip that is when they do over-invoicing so that they can ship out more dollars and bring it back. But if we move away from a subsidized foreign exchange, if we have a market-driven rate, all these malpractices will disappear. That is the fundamental truth.
“But the principal responsibility of trade issues lies with the Customs, lie also to a large extent, ministry of finance, ministry of industry, trade and investment. The responsibility of the CBN is to focus using monetary policy instrument on price stability, exchange rate stability which unfortunately they are not serving.”
He explained that right now, the country had a parallel trade policy, noting g that the Customs had a list of items that were already on the import prohibition list.
Yusuf noted; “The CBN has come up with another list of import prohibition list because if your product is not eligible for FX is as good as being prohibited. So it’s creating a lot of confusion. So CBN needs to step back away from all these trade policy issues and leave it to the Customs, ministry of finance, the ministry of industry, trade and investment. And if the CBN has any ideas on how to make things better, of course, they are all agencies of government.
“That is why it is important to ensure that in all this economic management issue there should be proper coordination so that we don’t have these economics, ministries and agencies operating in silos. They are creating a lot of problems for investors.”
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