The Central Bank of Nigeria (CBN) has lifted restrictions on importers of all the 43 items previously restricted by the 2015 circular referenced TED/FEM/FPC/GEN/01/010 and its addendums and has now allowed them to purchase foreign exchange in the Nigerian market.
Also, the CBN said that it will continue to promote orderliness and professional conduct by all participants in the Nigerian forex market, to ensure market forces determine exchange rates on a willing buyer-willing seller principle.
The CBN reiterated that the prevailing forex rates should be referenced from platforms such as the CBN website, FMDQ and other recognised or appointed trading systems to promote price discovery, transparency and credibility in the FX rates.
Dr Isa AbdulMumin, Director, Corporate Communications of the CBN, who disclosed this on Thursday in a press statement, said, “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.
“As part of its responsibility to ensure price stability, the CBN will boost liquidity in the Nigerian foreign exchange market by interventions from time to time.”
Reacting to the development, Professor Uchenna Uwaleke, Director, Institute of Capital Market Studies, Nasarawa State University, Keffi, said, “Regarding the readmission of the 43 items to the forex market, its 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 efforts.”
Dr AbdulMumin added that as market liquidity improves, the CBN interventions will gradually decrease.
He affirmed that the CBN is committed to accelerating efforts to clear the FX backlog with existing participants and will continue dialogue with stakeholders to address the issue.
According to him, the CBN has set as one of its goals the attainment of a single FX market and consultation is ongoing with market participants to achieve this goal.
He urged all participants and the general public to be guided by the latest information.
The list of the 43 non-eligible items unbanned from accessing forex by CBN include rice, cement, margarine, palm kernel/palm oil products/vegetables oils, meat and processed meat products, vegetables and processed vegetable products, poultry (chicken, eggs), turkey and private airplanes/jets.
Others are Indian incense, tinned fish in sauce (geisha)/sardines, cold-rolled steel sheets, galvanised steel sheets, roofing sheets, wheel barrows, head pans, metal boxes and containers, enamelware, steel drums, steel pipes, wire rods (deformed and not deformed), iron rods and reinforcing bars, wire mesh, steel nails, security and razor wire, wood particle boards and panels, wood fibre boards and panels, plywood boards and panels, wooden doors and furniture.
The items also covers toothpicks, glass and glassware, kitchen utensils, tableware, tiles – vitrified and ceramic textiles, woven fabrics, clothes, plastic and rubber products, polypropylene granules, cellophane wrappers, soap and cosmetics, tomatoes/tomato paste, eurobond/foreign currency bond/ share purchases, dairy/milk and maize.
Reacting to the development, he Centre for the Promotion of Private Enterprise (CPPE) has lauded the CBN over its decision to discontinue the forex exclusion policy on the 43 items.
This is even as the group warned the CBN to avoid market suppression tendencies, especially outside the Importers’ and Exporters’ (I&E) foreign exchange window.
In a statement signed on Thursday by the Director/CEO, CPPE, Muda Yusuf, the group said 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.
The statement read, “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 new directive will also improve transparency and disclosures in foriegn exchange transactions.”