….Says There had been No Ban On Import Of the Items
By CLEMENT NWOJI, Abuja
The Central Bank of Nigeria (CBN) has declared its reasons behind throwing open access to foreign exchange by importers of 43 items previously on restriction list.
The apex bank explained that by its latest action of reversing a policy which had been in place since 2015, it was intended “to promote orderliness and professional
conduct by all Nigerian Foreign
Exchange Market participants to
ensure market forces determine
exchange rates on a Willing Buyer
– Willing Seller principle.”
It observed that the hitherto restrictions “pushed importers into the parallel market, contributing to the surplus demand for FOREX. This weakened the parallel-market exchange rate, pushing up prices”, according to a statement placed on the bank’s website.
However, the apex bank said with its latest decision on liberalization of FX sourcing by the importers of the 43 items, “The CBN wants a unified market for FOREX with flexible and transparent pricing” and to ensure price stability and is seeking to
boost liquidity in the Nigerian
Foreign Exchange Market. As
liquidity improves, we expect the
distortions to moderate.”
Further, the bank cited the implications of removing the FX restriction on the 43 items to include the followings: “Monetary Policy tools become more effective with the attainment of a unified, well-
functioning market for FX , where
pricing is based on a willing-buyer
andwilling-seller system. With
this, the CBN’s core functions
and mandates become realisable.
“The willing-buyer and
willing-seller system allows the
exchange rate to adjust to clear the
market and ensure that there is
always supply. In recent months,
the widening premium between the
official rate and the parallel market
indicates that the rate has not been
setting a clearing price.
“Importers of these products rely
on the parallel market to source FX for importing these goods. This puts
additional demand pressures on
the parallel market, thereby
widening the gap with the
official rate and permanently
segmenting the market.
Removing these restrictions eliminates the need for importers of these products to go to the parallel market, reducing the pressure on the naira.
“The hitherto FX restrictions
had implications on inflation ,
causing the prices of affected
goods to increase.”
On how it the relaxation of FX restriction on the items would benefit local production, CBN explained that “Local production will benefit from cheaper imported inputs, and consumers will benefit from cheaper retail products”, adding that the policy is suitable for a unified FOREX market and positive as well for inflation.
CBN also expressed optimism that employment generation will be
boosted as closed factoriesre-
open just as price stability will benefit the economy and the standard of living in general.
The items previously placed on FX restriction list were 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;
Private Airplanes/Jets; Indian
Incense; Tinned fish in sauce
(Geisha)/sardine; Cold rolled steel
sheets; Galvanized steel 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 fiber boards
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, and Euro bond/
foreign currency bond/share purchases.
The bank explained that there was no outright ban on the importation of the above items as since been speculated rather than restriction on availability of FX to its importers.
News5 days ago