Importation business is a thriving one especially in an import-dependent country like Nigeria. Little wonder merchants make a significant amount from it over time. To maximize various opportunities, abound in the import business in Nigeria, there is no doubt that one needs to be well-grounded in the line of import business. One major challenge is accessing Forex for such transaction.
Note: If you are contemplating maximizing the various opportunities abound in import business in Nigeria, you must learn how to cross the hurdle of sourcing forex after CBN’s decision to stop the sales of dollars to BDC operators in the country. In an earlier article, we discussed the impact of this directive on SMEs whose businesses depend on forex, you can access the article HERE.
In a nutshell, as earlier stated, you must do a background check on the requirements that would make you have a seamless and effective transaction. In this light, three important forms you need as an importer in Nigeria are;
- Form M
- Form Q
- Form A
Form M: Form M is a compulsory documentation process designed by the Central Bank of Nigeria (CBN) to adequately monitor foreign physical products imported into the country. This form serves as a regulatory measure for the CBN to properly monitor the allocation of forex and enable it to calculate appropriately the import duties where applicable on the imported goods. The form is valid for a period of 6 months and can be extended for another 6 months.
According to the CBN guidelines: ‘’Any person intending to import physical goods into Nigeria shall in the first instance process the E-form M through any Authorized Dealer Bank irrespective of the value and whether or not payment is involved.’’
As a small scale importer, to obtain the electronic format of Form M (e-Form M), you need to;
- Write a formal request letter through your bank to the CBN. Your account manager will guide you on how to write this letter.
- Tender a proforma invoice which must be signed by the exporter.
- Tender the pre-requisite licences from NAFDAC and SON (if applicable).
- You must ensure that the product(s) you are trying to import is not on the CBN prohibition list. To check the products barred from accessing this form, kindly click HERE.
- You also need an insurance certificate to cover 110% of the Free on Board (FOB) value
- You also need to submit to your bank to process and initiate clearance of the Pre-Arrival Assessment Report (PAAR)
To pen an E-Form M, the importer requires the following documents; Certificate of Incorporation/Registration of the company in Nigeria, Registration with the Federal Inland Revenue Services (FIRS), up-to-date tax payment as evident by the Tax Identification Number (TIN) and a valid e-mail address tied to the TIN
Form A: This is an application form designed by the Central Bank of Nigeria to pay for service transactions (invisible trade) abroad, unlike Form M which basically deals with physical products. This form allows customers to purchase funds at the CBN or interbank rate to make payments for eligible services as predetermined by the foreign exchange manual. Example of the services eligible for this kind of form is paying school fees abroad. To use this form, one needs to;
- You need to visit your bank. As at the period of filing this report, only few Nigerian banks have access to this form and they are; Zenith Bank, Access Bank, First Bank of Nigeria, Stanbic IBTC, Guaranty Trust Bank, and Fidelity Bank.
- Use their customer care service. It is even better if you have a bank account at one of these banks. You should have the banking details of the services that you want to pay for with you
- You will be sent to the according desk, where they will give you the Form A to sign and fill. While filling in the form, you should make sure that you are doing it correctly. If something is unclear, you are recommended to clarify these questions. After you have filled the form and documented it, the bank will communicate with you about the payment details.
- The last step will be scanning the receipt that you have got as a result of the payment, and e-mailing this receipt to the receiving institution abroad.
Form Q: This form allows importers to buy forex in the official market window. The form is available at commercial banks. It is designed for importers in the small scale business enterprise which enables importers to access the sum of $20,000 per quarter in a year for the import of physical goods. To obtain this form, importers must;
- Provide the bank account number of the supplier in the PFI for direct transfer of the FX request.
- Formal application letter addressed to the CBN through your bank. The letter must contain your BVN details, details of what you intend to import, annual turnover of your business and an active email address
- Passport data page of Applicant
- Letter of request for forex allocation
- Proforma invoice
- CBN foreign exchange application form