In this piece, JOSEPH INOKOTONG chronicles the benefits advanced by the Nigerian Economic Group (NESG) in support of the Central Bank of Nigeria’s (CBN) discontinuation of the Price Verification System (PVS).
The Central Bank of Nigeria (CBN) has continually tinkered with the monetary and Nigerian Foreign Exchange (FX) market policies to contain emerging economic developments.
One such step is last week’s circular on the discontinuation of the Price Verification System (PVS). The action was necessitated by recent developments in the Nigerian Foreign Exchange (FX) market.
The Price Verification System Portal is an online platform introduced by the CBN to ensure that the prices of goods and services for foreign exchange transactions are accurately verified. It aims to prevent over-invoicing and under-invoicing, thus ensuring fair pricing in Nigeria’s import and export activities.
The CBN’s circular, which was addressed to all authorised dealer banks, and the general public states in part, “Consequently, with effect from July 01, 2024, all applications for Form ‘M’ shall be validated without the Price Verification Report generated from the Price Verification Portal. For the avoidance of doubt, by this circular, the Price Verification Report is no longer a requirement for the completion of a Form ‘M’. Please note and be guided accordingly.
Unlike some other policies of the CBN that have elicited admixtures of scathing criticisms and occasional applause, the discontinuation of PVS seems to have settled in with important stakeholders.
One of them is the Nigerian Economic Summit Group (NESG) which has publicly acknowledged and supported the recent decision by the Central Bank of Nigeria to discontinue the PVS policy.
Tagged ‘NESG Policy Brief on CBN’s Discontinuation of the Price Verification System Portal’, Nigeria’s economic think-tank in a detailed analysis of the discontinuation of the Central Bank of Nigeria’s Price Verification System Portal’, delved into the impacts and benefits to the Real Sector and the Nigerian Economy.
It highlighted that this policy change is a direct outcome of the collaborative effort of the NESG and the CBN in engaging with business leaders, and demonstrates its commitment to fostering dialogue between the public and private sectors for economic advancement.
A document from NESG’s Department of Research and Development made available to the Nigerian Tribune stated that at the recent NESG-convened meeting, in partnership with the CBN, business leaders articulated significant concerns regarding the Price Verification System Portal, among others, particularly noting its impact on operational efficiency and importation processes.
It acknowledged that the CBN, in response, has acted to enhance the business environment by eliminating the mandatory Price Verification Report for the completion of Form M’.
The implication of the CBN’s action underlines the numerous benefits to the Real Sector as it streamlined the importation process, the NESG stated and added that eliminating the Price Verification Report requirement will lead to a more streamlined importation process.
“By removing this administrative hurdle, businesses can expedite the importation of goods and raw materials, reducing lead times and improving the efficiency of supply chains”, the NESG posited.
According to the Group, this enhancement in operational efficiency is expected to lower production costs and increase the availability of goods in the market.
Also, the reduction in transaction costs has been highlighted by the NESG as the removal of the verification process will reduce the transaction costs associated with importation. Importers will save both time and money previously spent on compliance, allowing them to reallocate these resources towards more productive uses. This reduction in transaction costs is likely to enhance profit margins and promote investment in expansion and innovation.
Increased business confidence and investment is another area where the good intent of the policy will be felt in due time. In the estimation of the NESG, the discontinuation of the Price Verification System will contribute to a more business-friendly regulatory environment, thereby boosting investor confidence, and this improved sentiment is expected to attract both domestic and foreign direct investments (FDI). Undoubtedly, enhanced investment inflows will support the growth of the real sector, leading to increased production capacity and job creation.
Also, its impact on the entire Nigerian economy has been stated by the NESG. It pointed out that it would be a boost to manufacturing and industrial output. With a more efficient importation process, the manufacturing sector will benefit from timely access to essential inputs. This will enable higher levels of production and enhance the sector’s contribution to the Gross Domestic Product (GDP). The increase in industrial output will have a positive spillover effect on other sectors, further stimulating economic activity.
Another sphere of interest to watch carefully is the enhanced competitiveness the policy is likely to ignite. The NESG takes the view that reduction in bureaucratic bottlenecks will make Nigerian businesses more competitive globally. Lower operational costs and improved efficiency will enable businesses to offer more competitive prices, increase market share, and expand their export potential. This will contribute to a favourable balance of trade and strengthen Nigeria’s position in the global economy.
In the same vein, its support for macroeconomic stability can be sensed as the policy change aligns with the CBN’s core mandate of maintaining price stability and promoting sustainable economic growth. By reducing the cost of doing business and enhancing supply chain efficiency, the policy is expected to exert downward pressure on production costs, thereby contributing to inflation moderation. Moreover, increased economic activity and investment will support higher output growth, reinforcing the stability and resilience of the Nigerian economy.
The NESG commends the CBN for its responsiveness to the concerns raised by the business leaders and organised Private sector. It noted that this policy change not only reflects a commitment to improving the ease of doing business in Nigeria but also demonstrates the positive outcomes that can result from effective public-private dialogue.
The decision to discontinue the Price Verification System Portal is expected to enhance economic efficiency, boost industrial output, and support macroeconomic stability.
The NESG restated its dedication to facilitating such engagements and will continue to support initiatives that enhance the business environment and promote economic prosperity in Nigeria.
