EXTERNAL TRADE LETTERS OF CREDIT (CONTROL) ACT
Act · Trade
An Act regulates the opening of letters of credit for international trade, requiring Central Bank oversight. It targets importers, commercial banks, and the Central Bank. This manages foreign exchange reserves and prevents capital flight.
EXTERNAL TRADE LETTERS OF CREDIT (CONTROL) ACT
What Is This Policy?
An Act regulating the opening and management of letters of credit for international trade by Nigerian importers, requiring Central Bank of Nigeria oversight to manage foreign exchange outflows.
Who Does It Target?
Nigerian importers opening letters of credit Commercial banks issuing LCs on behalf of importers The Central Bank of Nigeria as the regulatory authority Foreign suppliers benefiting from Nigerian LCs
What Does It Aim to Achieve?
Control the opening of letters of credit to manage Nigeria's foreign exchange reserves, prevent capital flight, ensure LCs are opened only for legitimate trade transactions.
Key Features
CBN Approval: Letters of credit above specified values require CBN or authorised dealer bank approval before opening. Eligible Imports: LCs may only be opened for goods on the permissible import list — prohibited goods cannot have LCs. Foreign Exchange Allocation: The LC system manages how foreign exchange is allocated to importers from official sources. Documentation: Importers must provide supporting trade documents including commercial invoices and Form M.
Current Status
Rollout Stage: Active Coverage: All Nigerian importers using LC financing Beneficiaries: Nigerian foreign exchange management; importers Funding: Foreign exchange reserves
How to Access
Complete Form M (import declaration) before opening an LC Open LC through an authorised dealer bank Provide all trade documents required by the bank and CBN Application method: Open LCs through any CBN-authorised commercial bank.
Important Terms
LC proceeds must be used only for the specific imports for which they are opened Fraudulent LC applications constitute economic sabotage LCs for prohibited goods will not be approved
Official Resources
Website: https://www.cbn.gov.ng Contact: Central Bank of Nigeria (CBN)
Legal Framework
Enacted under the legislative powers of the National Assembly as the External Trade Letters of Credit (Control) Act (Cap E24 LFN 2004). Operates alongside the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, the Central Bank of Nigeria Act 2007, the Banks and Other Financial Institutions Act (BOFIA) 2020, and the Customs and Excise Management Act. Aligns with ICC Uniform Customs and Practice for Documentary Credits (UCP 600).