BoG issues fresh guidelines on use of LOC in cross-border trade

The Bank of Ghana has issued new operational guidelines on the use of Letters of Commitment (LOCs) in cross-border trade, seeking to tighten foreign exchange oversight while removing barriers for small-scale traders at Ghana’s borders.

In a public notice dated 22 December 2025, the central bank spelt out exactly who is required – and who is not permitted – to generate an LOC under the Integrated Customs Management System (ICUMS), following growing confusion among exporters, freight forwarders and customs officials.

Who must use an LOC

The BoG said LOCs are strictly for formal merchandise exports, and only exporters who meet all of the following criteria are eligible to generate one:

They receive export proceeds in foreign currency

They are resident in Ghana

They are registered and licensed by the appropriate state agencies

They have a valid Tax Identification Number (TIN) and ICUMS access

Any entity that falls outside these parameters, the bank stressed, must not attempt to generate an LOC.

The clarification is part of a broader push to ensure export-related foreign exchange inflows are captured and repatriated through the formal banking system.

In a significant carve-out, the BoG has exempted informal cross-border trade from the LOC requirement where the buyer:

Is from a neighbouring country but not registered on ICUMS, and

Does not use a formal invoicing system.

For such transactions, an LOC “should not be included as part of the required documentation”, the bank said, effectively removing a compliance layer many small traders had argued did not reflect the realities of informal regional commerce.

Observers say the move could help sustain livelihoods in border communities and reduce friction along key West African trade corridors.

The central bank also delivered a stern directive to freight forwarders and customs house agents not to use their own TINs to generate LOCs for traders who do not qualify.

That practice, the BoG warned, compromises the integrity of export documentation and exposes service providers to sanctions.

In parallel, customs officers of the Ghana Revenue Authority have been instructed not to compel buyers from neighbouring countries to obtain LOCs where the transaction is clearly informal and outside the ICUMS framework.

The central bank said compliance efforts should concentrate on formal exports with foreign exchange implications, while legitimate informal trade should be facilitated rather than restricted.

The new guidance reflects a calibrated approach: tightening controls where foreign exchange earnings are at stake, but avoiding over-regulation of informal flows that could push activity further underground.

As Ghana works to rebuild external buffers and strengthen foreign-exchange management under its wider macroeconomic reform agenda, the BoG says effective enforcement of export documentation – without disrupting genuine trade – will remain a priority.

For exporters, freight forwarders and border traders, the circular provides long-awaited clarity. The next test will be consistent, on-the-ground implementation across ports and land borders.