Letter of Credit (Nigeria)
IRREVOCABLE DOCUMENTARY LETTER OF CREDIT
Subject to Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication No. 600 (UCP 600)
LC No.: [LC Number]
Date of Issue: [Issue Date]
ISSUING BANK:
[Issuing Bank Name], [Issuing Bank Address]
SWIFT/BIC: [SWIFT Code]
APPLICANT:
[Applicant Name], [Applicant Address]
BENEFICIARY:
[Beneficiary Name], [Beneficiary Address]
CREDIT DETAILS:
Credit Type: [LC Type]
Amount: [LC Amount]
Expiry Date: [Expiry Date]
Expiry Place: [Expiry Place]
Form M No. (CBN): [Form M Number]
GOODS:
[Goods Description]
SHIPMENT TERMS:
Port of Loading: [Port of Loading]
Port of Discharge: [Port of Discharge]
Latest Shipment Date: [Latest Shipment Date]
Partial Shipments: [Partial Shipments]
Transhipment: [Transhipment]
DOCUMENTS REQUIRED:
[Documents Required]
UNDERTAKING:
[Issuing Bank Name] hereby undertakes that all drafts drawn under and in compliance with the terms of this Credit will be duly honoured on presentation, provided that all documents are presented on or before the expiry date at the expiry place stated above. This Credit is subject to UCP 600 and shall be governed by the laws of the Federal Republic of Nigeria.
Authorised Signatory (Issuing Bank)
________________
Signature
Applicant
________________
Signature
What Is a Letter of Credit (Nigeria)?
A Letter of Credit in Nigeria sets out, in writing, the request or notice the sender directs to the recipient.
The legal foundation for letters of credit in Nigeria draws from the Bills of Exchange Act (Cap B8, Laws of the Federation of Nigeria 2004), the Banks and Other Financial Institutions Act 2020 (BOFIA 2020), and the CBN's Foreign Exchange Manual and Trade Finance Guidelines. All letters of credit involving foreign currency must be processed through an Authorised Dealer — a bank licensed by the CBN under Section 47 of BOFIA 2020 to deal in foreign exchange — in compliance with the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act (Cap F34, LFN 2004).
Nigerian commercial banks including First Bank of Nigeria, Zenith Bank, United Bank for Africa (UBA), and Access Bank routinely issue documentary letters of credit for import and export transactions. The Nigeria Export Processing Zones Authority (NEPZA) and the Nigerian Export Promotion Council (NEPC) support LC-backed export finance for qualifying exporters. For import transactions, the Nigerian Customs Service and the Standards Organisation of Nigeria (SON) require Form M — the statutory import declaration — to be opened before the issuance of an import LC under the CBN's Trade Finance Circular.
A Letter of Credit must be distinguished from a Bank Guarantee, which is a secondary obligation (contingent on default by the principal), whereas an LC is a primary payment obligation triggered by documentary compliance regardless of the underlying contract. Under UCP 600 Article 5, banks deal in documents and not in goods, services, or performance of contracts — making the LC an autonomous instrument independent of the underlying sale contract between buyer and seller.
The legal framework governing the Letter of Credit (Nigeria) in Nigeria draws on several key statutes and regulatory bodies. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Parties executing a Letter of Credit (Nigeria) in Nigeria should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Uniform Customs and Practice for Documentary Credits (UCP 600) sets the foundational requirements.
When Do You Need a Letter of Credit (Nigeria)?
A Letter of Credit in Nigeria is needed whenever a buyer and seller in a commercial transaction require a bank-backed payment mechanism that assures the seller of payment and assures the buyer that payment is conditional on documentary proof of shipment or performance.
An LC is required for import transactions into Nigeria when the foreign supplier requires payment security before manufacturing or shipping goods, particularly where the Nigerian buyer lacks an established credit relationship with the supplier. The CBN's Trade Finance Guidelines and the Form M process make the LC the standard instrument for most Nigerian imports above a de minimis threshold.
An LC is needed for export transactions from Nigeria when a Nigerian exporter is supplying goods — such as agricultural commodities, crude oil derivatives, or manufactured goods — to a foreign buyer who offers LC-backed payment as security for the export proceeds. The NEPC and NEXIM Bank (Nigerian Export-Import Bank) provide LC confirmation and discounting facilities for Nigerian exporters.
An LC is required in construction and engineering project finance where the employer (project owner) provides an LC in favour of the contractor or equipment supplier to secure milestone payments, particularly on infrastructure projects funded by the Federal Government of Nigeria or state governments through the Budget Office of the Federation.
An LC is needed for transactions under the Economic Community of West African States (ECOWAS) Trade Liberalisation Scheme (ETLS), where intra-regional buyers and sellers require documentary credit assurance that complies with ECOWAS trade protocols and the respective central bank regulations of member states.
Parties in Nigeria should prepare a Letter of Credit (Nigeria) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Letter of Credit (Nigeria)
A valid Letter of Credit in Nigeria must contain the following essential elements to comply with UCP 600 and CBN requirements.
Issuing Bank Details: The full name, address, SWIFT code, and CBN licence number of the Nigerian issuing bank. Under BOFIA 2020, only licensed banks may issue letters of credit. The issuing bank's SWIFT BIC code is required for international LC transmission through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network.
Applicant and Beneficiary Identification: Full legal name and address of the applicant (Nigerian buyer/importer) and the beneficiary (foreign or domestic seller/exporter). For corporate applicants, include the Corporate Affairs Commission (CAC) RC number under the Companies and Allied Matters Act 2020 (CAMA 2020).
LC Number and Date: A unique reference number assigned by the issuing bank and the date of issuance. The expiry date and place of expiry must be stated per UCP 600 Article 6.
Amount and Currency: The LC amount in the agreed currency (USD, EUR, GBP, or NGN), with any permitted tolerance (typically ±10% under UCP 600 Article 18(b) unless otherwise stated). For NGN-denominated LCs, the exchange rate mechanism and CBN Form M reference must be stated.
Required Documents: A precise list of documents against which payment will be made — typically including a commercial invoice, full set of clean on-board bills of lading or airway bills, packing list, certificate of origin, and any inspection certificates required by the Nigeria Customs Service, SON, or National Agency for Food and Drug Administration and Control (NAFDAC).
Shipment and Presentation Terms: Latest date for shipment, latest date for presentation of documents (not less than 21 calendar days after shipment under UCP 600 Article 14(c)), port of loading, and port of discharge.
Credit Type: Whether the LC is sight, deferred payment, acceptance, or negotiation credit — as defined under UCP 600 Articles 2 and 6.
Partial Shipments and Transhipment: Whether partial shipments and transhipment are permitted or prohibited under UCP 600 Articles 31 and 33.
Additional compliance elements for a Letter of Credit (Nigeria) used in Nigeria include: Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Forms-legal.com provides this template as a starting point for Nigeria-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Letter of Credit (Nigeria) (Nigeria) [Legal document template]. Forms Legal. https://forms-legal.com/nigeria/financial/agreements/letter-of-credit-nigeria
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author = {{Forms Legal}},
title = {Letter of Credit (Nigeria) (Nigeria)},
year = {2026},
howpublished = {\url{https://forms-legal.com/nigeria/financial/agreements/letter-of-credit-nigeria}},
note = {Free legal document template. Based on Uniform Customs and Practice for Documentary Credits (UCP 600)}
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Frequently Asked Questions
A Letter of Credit and a Bank Guarantee are both bank-issued instruments that provide payment security, but they operate differently under Nigerian and international law. A Letter of Credit (governed by UCP 600) is a primary payment obligation — the issuing bank must pay the beneficiary upon presentation of compliant documents, regardless of any dispute between the buyer and seller under the underlying contract. A Bank Guarantee, by contrast, is a secondary or contingent obligation — the guarantor bank pays only if the principal (the party on whose behalf the guarantee is issued) defaults on its contractual obligations. Under Nigerian law, bank guarantees are governed by the Banks and Other Financial Institutions Act 2020 (BOFIA 2020) and general contract law principles from the Contracts Act. In trade finance, an LC is preferred by exporters because payment is triggered by documentary compliance alone, whereas a guarantee requires proof of default. For performance bonds on Nigerian construction projects, a Bank Guarantee or Performance Bond under FIDIC or FIDIC-equivalent contracts is more common. The Central Bank of Nigeria (CBN) regulates both instruments through its Banking Supervision Department.
Form M is a statutory import declaration document issued by Nigerian commercial banks on behalf of importers under the Central Bank of Nigeria's Trade Finance Guidelines and the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act (Cap F34, LFN 2004). Before an import Letter of Credit can be established by a Nigerian bank, the importer must first open a Form M with an Authorised Dealer bank (a CBN-licensed bank). The Form M captures details of the imported goods, the foreign supplier, the port of destination, and the value in foreign currency. The Nigeria Customs Service requires a valid Form M as a precondition for customs clearance of imported goods. The Form M is electronically processed through the Nigeria Single Window Trade Portal. Once the Form M is approved, the bank can open the corresponding import LC. Under CBN policy, certain goods are prohibited from being financed through Forms M and LCs, including items on the CBN's exclusion list (such as rice, cement, and used vehicles above certain thresholds) as part of import substitution policy. Failure to process a Form M for dutiable imports is an offence under the Customs and Excise Management Act (Cap C45, LFN 2004).
Letters of Credit in Nigeria are governed by a combination of Nigerian statutes and international banking rules. The primary international framework is the Uniform Customs and Practice for Documentary Credits (UCP 600), published by the International Chamber of Commerce (ICC), which Nigerian banks adopt by express incorporation in the LC text — per UCP 600 Article 1. Nigerian domestic law that applies alongside UCP 600 includes the Bills of Exchange Act (Cap B8, LFN 2004), the Banks and Other Financial Institutions Act 2020 (BOFIA 2020), and the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act (Cap F34, LFN 2004). Central Bank of Nigeria circulars and guidelines — including the Trade Finance Guidelines and the CBN Foreign Exchange Manual — impose additional procedural requirements for LCs involving foreign currency. Where a dispute arises under an LC, Nigerian courts (primarily the Federal High Court, which has jurisdiction over banking matters under Section 251(1)(d) of the Constitution of the Federal Republic of Nigeria 1999 (as amended)) apply UCP 600 as the contractually incorporated rules, supplemented by Nigerian contract law principles and the Bills of Exchange Act.
The documents required under an import Letter of Credit in Nigeria depend on the nature of the goods and the requirements of the Nigeria Customs Service, the Standards Organisation of Nigeria (SON), and the National Agency for Food and Drug Administration and Control (NAFDAC) for regulated products. A standard set of import LC documents in Nigeria typically includes: a signed commercial invoice in the number of copies specified; a full set of clean on-board bills of lading (for sea freight) or airway bills (for air freight) made out to the order of the issuing bank or the named applicant; a packing list; a certificate of origin (for goods claiming ECOWAS or other preferential tariff treatment); a combined certificate of value and origin (Form C16) where required by Customs; a Pre-Shipment Inspection certificate issued by a CBN/government-approved inspection company such as SGS, Bureau Veritas, or Cotecna under the Destination Inspection Scheme; and NAFDAC certification for food, drugs, and cosmetics under the NAFDAC Act (Cap N1, LFN 2004). Additional certificates may be required by the importing company's internal policies or by the terms of the underlying sale contract. Under UCP 600 Article 14, the issuing bank has five banking days to determine documentary compliance.
Under UCP 600 Article 10, an irrevocable Letter of Credit — which is the default type under UCP 600 Article 3 — cannot be amended or cancelled without the agreement of the issuing bank, the confirming bank (if any), and the beneficiary. This principle is fully recognised by Nigerian banks and Nigerian courts applying UCP 600. The applicant (Nigerian importer) cannot unilaterally instruct the issuing bank to cancel or amend the LC once it has been issued and received by the beneficiary. To amend an LC, the applicant must request the issuing bank in writing, specifying the amendment required (for example, extension of the expiry date, increase in the LC amount, or relaxation of document requirements). The issuing bank transmits the amendment to the advising bank, and the amendment takes effect only when the beneficiary accepts it — either expressly or by presenting compliant documents under the amended terms. Under CBN guidelines, amendments to import LCs that increase the value or change the goods description may require a corresponding amendment of the underlying Form M before the issuing bank can process the amendment request.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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