- The CBN has finally lifted the foreign exchange restrictions that were imposed on 43 items 8 years ago
- The ban stopped manufacturers and importers of the items from accessing forex from the official market
- Experts in a chat with Legit.ng provided insight into how CBN decisions will affect the forex markets
Experts have reacted to lifting of the ban placed on 43 items from access to foreign exchange (FX) in the official market by the Central Bank of Nigeria (CBN) since July 2015.
At the time of the ban decision, Godwin Emefiele said it would help conserve foreign reserves.
He added that it would also facilitate the resuscitation of domestic industries and improve employment generation
Photo credit: CBN
Source: Facebook
However, the reverse was the case as it contributed to the rise in the prices of the items because importers were forced to use the black market to bring in their goods
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CBN lifts ban
On Thursday, October 12, 2023, the new CBN management decided to lift the restrictions.
In a press statement signed by its Director of Corporate Communications, Dr. Isa Abdulmumin, the CBN hopes that this decision will help in achieving a unified exchange rate.
Part of the statement reads:
“Importers of all the 43 items previously restricted by the 2015 Circular referenced TED/FEM/FPC/GEN/01/010 and its addendums are now allowed to purchase foreign exchange in the Nigerian Foreign Exchange Market.”
Expert reacts to CBN decision
Reacting to the development, Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), told Legit.ng that the decision was a welcome development.
According to him, the ban has been one of the several factors driving distortions in the forex market.
His words:
“We welcome the decision of the CBN to discontinue the forex exclusion policy on the 43 items. It is a move in the right direction. It is part of the policy normalisation process.
The exclusion of the 43 items was one of the several drivers of distortions in the forex market. The exclusion of the items also contributed to the persistent divergence in rates between the official window and the parallel market.”
” The exclusion was also in conflict with extant trade policy as the items were not under import prohibition in the first place. It was an example of lack of policy coordination under the previous administration.”
The past Director General of the Lagos Chamber of Commerce and Industry (LCCI) also stressed that the new directive would improve transparency and disclosures in foreign exchange transactions.
He continued:
“The CBN should avoid market suppression tendencies, especially outside the I and E window.
“The fiscal authorities should continually monitor the economic landscape to shape the character of fiscal policy measures to regulate imports in line with comparative advantage principles.
“We need to worry about the risk of an import surge. There is also a need to upscale the use of fiscal policy measures to boost domestic production and productivity.”
Also, Prof Uche Uwaleke, Professor of Capital Market at the Nasarawa State University and President of Capital Market Academics of Nigeria told Legit.ng the gap between the black market and the official market will be reduced.
He said:
“Regarding the readmission of the 43 items to the forex market, it’s immediate impact will be to reduce the premium between the official and the parallel market.
“But it will have negative implications for import substitution and local manufacturing.”
List of 43 items readmitted to the official market
- Rice
- Cement
- Margarine
- Palm kernel
- Palm oil products
- Vegetable oils
- Meat and processed meat products
- Vegetables and processed vegetable products
- Poultry and processed poultry products
- Tinned fish in sauce (Geisha)/sardine
- Cold rolled steel sheets
- Galvanized steel sheets
- Roofing sheets
- Wheelbarrows
- Head pans
- Metal boxes and containers
- Enamelware
- Steel drums
- Steel pipes
- Wire rods (deformed and not deformed)
- Iron rods
- Reinforcing bars
- Wire mesh
- Steel nails
- Security and razor fencing and poles
- Wood particle boards and panels
- Wood fiberboards and panels
- Plywood boards and panels
- Wooden doors
- Toothpicks
- Glass and glassware
- Kitchen utensils
- Tableware
- Tiles-vitrified and ceramic
- Gas cylinders
- Woven fabrics
- Clothes
- Plastic and rubber products
- Polypropylene granules
- Cellophane wrappers and bags
- Soap and cosmetics
- Tomatoes/tomato pastes
- Eurobond/foreign currency bond/ share purchases
Naira falls to its lowest level in history against the US dollar
Legit.ng earlier reported that the Naira again plunged to new lows on the parallel market, causing more headaches for the new CBN team.
The new team is expected to meet next week for their first monetary policy meeting and is expected to create a clear direction for the forex market.
Source: Legit.ng
