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Directive No. FXD/28/2006
Flower Export and Foreign Exchange
Repatriations
Whereas
the Floricultural development and growth in the country is a
promising business activity that is attracting many investors to
undertake the business and is anticipated to be
an important source of foreign
exchange to the economy in the future;
Whereas
the
export of flower requires a special attention, follow-up and
support in processing the export formalities by
banks, recording the transactions
and shipments.
Whereas
the price of
flower fetched at various international markets vary due to
various factors which requires regularly monitoring and follow-up
of the trading price development and proceed repatriation using
the appropriate mechanisms put in place.
Now,
therefore, in accordance with the Monetary and Banking
Proclamation No. 83/1994 article 39 (1) and (2), this Directive is
issued to monitor the export of flower, proceed repatriations and
trading price.
I.
Short Title
This
Directive may be cited as Flower Export and Foreign Exchange
Repatriations Directive No. FXD/28/2006"
2.
Definitions
In
this Directive, unless the context provides otherwise, the
following terms shall have the meanings ascribed below:-
(a)
"NBE"
shall mean the National Bank of Ethiopia
(b)
"Banks" shall mean Commercial Banks that
process export permits
and collect proceeds from buyers and report to NBE.
(c)
"Direct Sales
Contract" - flower export sales arrangements made on
contractual or consignment basis.
(d)
"Flower Auction
Market" - a specialized market where flowers of different
species, grade and quality are traded on the basis of bid price
offered.
(e)
"Auction
Processing Agent" - an organization/individual
officially
representing exporters at flower auction centers, processing
the sales at the centers, collecting payments and transferring the
proceeds to
exporters.
(f)
"Auction
Sales Outcome Report" - A
report that is provided by the
auction center to the exporter after the flower is sold on auction and
handing over the items to the winners.
(g)
"Specialized
Report On Flower" - A
report prepared by the auction
center and released
to market
participants, by country and geographical locations.
(h)
"Place
of Auction" - Generally refers to flower auction centers
in many
countries and specific to the ones in Netherlands.
3.
Flower Export Arrangements and Mode of Payments
1
Sales arrangements shall be carried out in the following
two forms:-
(a)
Direct sales
i.
contract base sales
ii consignment
sales
iii
negotiated sales
(b)
Sales at the Auction Market
2
The Mode of payments applicable for flower exports
(a)
Consignment sales (Open Accounts);
(b)
Letter of Credit (sight, acceptance upto 60 days);
(c)
Cash Against Document (sight, acceptance upto 60 days); and
(d)
Advance payment (transferred through banking system).
4.
Flower Export Permit Processing by Banks
The following shall apply for processing flower export
permits
1
All requirements indicated under FXD/26/2004 issued for
processing
export permits, monitoring
the Fx repatriation and
documentation
requirements shall be
applicable for the export of flower as well.
2
In addition
to article 4.1 of the
above,
(a)
Exporters are required to
indicate on
the export
application the
market where the flower
is intended to
be sold. (Auction
Market/Direct
Market), including
the name of the agent delegated
to process on
behalf of the exporter.
(b)
Exporters are also required to submit copies of the
following documents along with the application
(i)
Registration certificate or acceptance letter to
participate
at the auction center named.
(ii)
Copy of the agreement signed with the intermediary agent
authorized for handling the sales of the flower at the
auction center. The agreement should explicitly
indicate charges and fees payable.
The total charges deducted should not be more than
25% of the sales proceed expected from a particular export.
(iii)
Purchase contracts or requisition for supply of flower from
the buyer. (not applicable for auction sales)
(c)
If exporters are using a specific bank and branch to
process their
export permits, items required under b(i) and (ii) can be
placed in a
permanent file and may not
be necessary to attach with
every
export application. However, if changes are made the
exporter is
responsible to update the file and duly inform the bank.
3
On the
export application to be
presented, the
quantity and variety of
roses (summer/cuttings) of flower to be exported shall be
expressed in Number of stems
including the total estimated value in foreign currency
and the estimated price per stem. Partial shipments
scheduled should aggregate and tally to the quantity and value
expressed in the original application.
4
Exporters
are expected to sell on the basis of the market price prevailing
at the
auction. Accordingly, the
application form
presented by
the
exporter should reflect
the prevailing price per stem for the flowers to be
sold.
5
Any
partial shipment effected should bear
the original permit number
issued by its bank and partial shipment reference to which the
quantity shipped is
supposed to be consistent
to the
balance remaining under the permit.
Exporters should therefore carefully check the balance and
process the export provided sufficient balance in terms of
quantity is available under the export permit.
5.
Repatriation of Export Proceed
1 Exporters
shall have the responsibility to repatriate fully the net amount
earned from
the market in compliance with Article 4.2-b (ii) within
90
days from date of permit issuance.
2
Transfer of payments by the Auction agents or
the direct buyers shall
clearly identify the bank
permit or partial shipment ref and the
appropriate references from the exporter.
This requirement shall
also be included on each invoice issued by the exporter inorder to draw
the awareness of buyers
or the processing agents.
3
Any deductions retained out of the export proceeds for
the purposes of covering agents fees and processing costs should
clearly be stated in the
transfer documents by providing details regarding
the Bank permit number or partial
shipment reference number and others.
6.
Reporting
Requirements
The following organizations and entities shall submit reports to NBE on
regular basis.
1
Commercial Banks
a)
Banks shall report the
status and position of flower exporters by providing details of
the export permit issued, partial shipments made, proceeds
received against the permits
issued and deductions made as well.
b)
All
reports submitted to NBE shall be supported with documents
and
relevant information confirming fulfillment of the export
processes in line with the existing directives and
procedures.
2
Flower Growers & Exporters' Association
a)
The flower growers/exporters Association shall forward
flower auction prices fixed at the auction market specially the
prices offered for flowers from Ethiopia, Tanzania, Uganda and
Kenya on weekly intervals to NBE.
b)
Sales
results obtained from Direct and Auction Markets at least for
5%
of the active list of exporters systematically picked shall be
forwarded by the Association to NBE on weekly basis.
c)
Flower
exporters shall arrange for proper information flow through
their Auction
Processing Agents who are expected
to provide
reports on the outcome
of auction results
and details of the FX
proceed transferred including
deductions made from
each
consignment delivered at the
auction center to
their respective
banks who issued
the export permits.
3
Ethiopian Customs Authority
The Ethiopian Customs Authority shall send to NBE monthly
reports of flower exports processed through their office
classifying the details by exporters name, type of flower, number
of stems, and the estimated values in Foreign Exchange, Bank
permit number or partial shipment reference if any.
4
Flower Exporters
The following reports shall be submitted by the flower exporters to their
bank who issued the
export permits.
If any rejections, damages or spoilage of flowers,
partially or
wholly encountered after shipments
are effected,
the situation
should immediately be reported by the exporter to
its bank with
supporting documents attached.
7.
Ex-post Price Verifications and Monitoring
1
Based on the export file and reports received from banks
the NBE shall conduct ex-post price verifications and checks the
proper compliance to the regulation in place.
2
Corrective actions and measures shall be taken based on the
findings of the ex-post price verifications and inspection reports
presented.
8.
Effective date
This
Directive shall enter into force as of 28th day of
August, 2006
Teklewold
Atnafu
Governor
National
Bank of Ethiopia
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