X-raying the benefits of e-Form ‘A’ in FX transaction

The Central Bank of Nigeria (CBN) in November 2021 informed all authorized dealers and the general public of the deployment of e-Form ‘A’.

Form ‘A’, according to GTCO, is an application form designed by the Central Bank of Nigeria to pay for service transactions (invisible trade).

The form allows customers to purchase foreign exchange at the CBN or interbank rate to make payments for eligible services. Such eligible services include Basic Travel Allowance (BTA), Personal Travel Allowance (PTA), medical and tuition, among others.

Many believe the e-Form ‘A’ has eased access to FX especially for travelers, for those paying school fees and health bills and so on. Ayodeji Ebo, head, retail investment, Chapel Hill Denham, said it promotes transparency and reduces unnecessary delays.

Specifically, it has reduced interface with the banks because once you create an account, fill the Form ‘A’ and submit genuine documents, within 24 hours you are notified of approval or denial. So it is no longer open to banks’ manipulations.

Also it has helped to reduce lost time for FX applicants as well as reduced graft in FX trading, analysts in the financial market admitted.

Accordingly, the e-Form ‘A’ shall replace the hard copy of Form ‘A’ for invisible transactions (PTA/BTA, medicals, education, other remittances etc.), with effect from November 30, 2021.

Apart from Form ‘A’, there are other foreign exchange forms, which include Form ‘M’, an application to import (i.e imports of physical goods- Visible trade); Form NXP – Used for commercial exports, including oil exports; Form NCX – Used for non-commercial exports; Form TE – Declaration of import of foreign currency above US 5,000.00, Form TM – Declaration of import of foreign currency above US$5,000.00 or its equivalent, precious stones, jewelry and works of art (including antiquities) into Nigeria.

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Prior to the deployment of the electronic Form ‘A’, banks were ensured that they hold adequate stock of these forms which can be obtained from the Foreign Exchange Management Office, Trade & Exchange Department, Central Bank of Nigeria, Abuja, except the Forms TE & TM which are to be collected from the Nigeria Customs Service or the Nigeria Immigration Service.

The foreign exchange forms were duly completed in accordance with the instructions on each form. One of the risks associated with the traditional Form ‘A’ requirement for accessing foreign exchange was the ability of the banks to manipulate the transaction.

In a circular to all authorised dealers signed by O.S Nnaji, director trade exchange department, the CBN said that the processing of Form ‘A’ shall only be done electronically on the Trade Monitoring System accessible at www.tradesystem.gov.ng.

The circular stated that the general public is required to obtain a valid Bank Verification Number (BVN) from their authorized dealer banks. The BVN is a prerequisite for customers to access the trade system for e-Form ‘A’ application; the e-Form ‘A’ is web based and allows the General Public to initiate the Form from their offices/homes and submit the same to the authorized dealer bank.

The CBN said a charge of N5,000.00 as fee per declaration of e-Form ‘A’ is applicable with effect from November 30, 2021 and henceforth. There will be a direct debit of the processing bank’s current account for each declaration which should be recovered from the customer by the bank, however, the charge on the customer for the e-Form ‘A’ should be separated from other bank charges.

All hard copies of Forms ‘A’ established on or before November 30, 2021 (prior to the commencement of the e-Form ‘A’) shall be utilized within 15 working days of the establishment of the Form, the circular stated.

“For avoidance of doubt, all established hard copies of Forms ‘A’ for which disbursement had not been made within the transition period of 15 working days shall be deemed canceled; all authorized dealer banks are enjoined to inform their customers of this development for compliance. Please ensure strict compliance,” the circular reads.

Similarly, on the same day, the CBN informed all authorized dealers, Nigerian Customs Service (NCS), Shipping Lines & Airlines, National Museum and Monuments and the General Public of the deployment of e-Form `NCX’.

Accordingly, the e-Form ‘NCX’ shall replace the hard copy of Form `NCX’ for non-commercial exports, with effect from November 30, 2021.

It was stated in the circular that authorized dealer banks are to ensure that their customers obtain a valid Tax Identification Number (TIN) from Federal Inland Revenue Service (FIRS)/Joint Tax Board (JTB). The TIN is a prerequisite for customers to access the Trade System for e-Form ‘NCX’ application.

“All authorised dealer banks are enjoined to inform their customers of this development for compliance,” the circular reads.

In compliance with the directive of the CBN, banks in November 2021 issued notices to their customers regarding the automation of Form ‘NCX’ for invisibles by the regulator.

Consequently, FSDH Merchant Bank Limited sent a notice to its customers. “Dear valued customer, we wish to bring to your notice that CBN has deployed the automated Forms A & NCX for invisible and Non-Commercial export transactions (in addition to Commercial Export already on the platform) on the TRMS platform”.

TRMS simply means Transaction Monitoring System. The essence of this is to leverage digital technology to simplify (from the comfort of the applicant’s desk) and unify the processes involved in completing these transactions as well as for global monitoring and reporting purposes.

“Hence, it has become imperative for every individual (Current and Potential customers for invisible transactions e.g., for Tuition Fee, Upkeep, Medical Fee, BTA/PTA, Subscription, Professional Exams/Certification fee etc.) to immediately sign up on the TRMS platform preparatory to cut over to the new system by the CBN,” FSDH said.

To do this, individuals should first update their BVN information with active and accessible email addresses and phone numbers (these details would be required in the course of signing up on the TRMS platform).

The e-Form ‘NCX’ is web-based and allows non-commercial exporters to initiate the Form from their offices/homes and submit the same to the Authorized Dealer Bank.

The CBN said a charge of N5,000 as fee per declaration of e-Form ‘NCX’ is applicable with effect from November 30, 2021 and henceforth.

Furthermore, there will be a direct debit of the processing bank’s current account for each declaration which should be recovered from the customer by the bank. However, the charge on the customer for the e-Form ‘NCX’ should be separated from other bank charges, the CBN said.

It added that all hard copies of Forms ”NCX’ established on or before November 30, 2021 (prior to the commencement of the e-Form ‘NCX’) shall be utilized within 90 days of the establishment of the Form.

“For avoidance of doubt, all established hard copies of Forms ‘NCX’ for which shipment has not taken place within the transition period of 90 days shall be deemed canceled.”

Foreign exchange inflow to the economy improved in the third quarter (Q3) 2021 due to increased non-oil receipts, the CBN said in its third quarter economic report.

Foreign exchange inflow into the economy rose significantly by 65.0 per cent to US$30.20 billion, compared with US$18.30 billion in the preceding period.

The development was driven by the 158.4 per cent and 13.4 percent increased inflow through the CBN and the autonomous sources, respectively.

Foreign exchange inflow through the CBN at US$16.83 billion increased significantly above the US$6.51 billion in the preceding quarter due to additional Special Drawing Rights (SDR) allocation and proceeds from the Euro bond sales.

A disaggregation showed that non-oil receipts increased to US$14.97 billion, compared with the US$4.60 billion in the preceding quarter.

However, receipts from oil-related sources fell by 2.7 per cent to US$1.86 billion, relative to the value in the second quarter of 2021.

Foreign exchange inflow through autonomous sources was US$13.37 billion, compared with US$11.79 in the preceding period, as a result of improved inflow from invisible purchases and non-oil export receipts.