Lagos, Nov. 25, 2023: The Governor of Central Bank of Nigeria (CBN), Mr Olayemi Cardoso, has clarified that the 43 items were never explicitly prohibited from importation or sale in Nigeria.
Instead, he said that the apex bank had implemented restrictions on accessing foreign exchange for the importation of these items.
Cardoso gave this clarification at the 58th annual bankers’ dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN), on Friday in Lagos.
He emphasized that the issue of trade policy, specifically the importation and sale of the 43 items, was primarily within the domain of the fiscal authorities, not the Central Bank of Nigeria.
This distinction, he said, was important because it clarifies that the CBN’s decision to lift the FX restrictions on these items is not intended to encroach upon the responsibilities of other government agencies.
The CBN had in a circular in June 2015, published a list of imported goods and services that will not be eligible for foreign exchange in the Nigerian foreign currency market.
The list which was originally 41 was updated to include two more items.
Cardoso said, “Allow me to provide further clarification on the issue of the 43 items.
“Firstly, it is important to note that these items were never outrightly banned by the government.
“ The CBN had imposed restrictions on their access to foreign exchange in the official market.
“However, these restrictions resulted in increased demand for foreign exchange in the parallel market, leading to the depreciation of the exchange rate in that segment of the Nigerian Foreign Exchange Market and widening the premium between the parallel and official market.’’
Cardoso said studies have shown that during the period when the 43 items were restricted, there was a 51.0 per cent increase in trade evasion by importers accessing the foreign exchange market.
According to him, this resulted in a revenue drop of approximately US$1.4 billion, or US$275 million annually, between 2015 and 2019.
Additionally, he said that revenue from tariffs on goods decreased from a high of approximately US$920 million in 2011 to about US$250 million in 2017.
“In 2019, the actual tariff on goods stood at US$320 million, but counterfactual evidence suggests that as much as $680 million could have been earned in the same year.
Furthermore, he said evidence had shown that foreign exchange restrictions had an adverse impact on Nigerian households and contributed to inflationary pressures.
He said that the reduction in trade restrictions and levies on rice, sugar, and wheat by 50.0 per cent had only a minimal impact on welfare, with a 0.8 per cent improvement, and a mere 0.4 per cent reduction in extreme poverty.
Moreover, Cardoso said that the benefits of trade gains for the general population were negligible, as the average industry in Nigeria pays 13.7 per cent more for its inputs.
According to the central bank, this action will boost liquidity in the Nigerian Foreign Exchange Market and intervene from time to time, adding that interventions will decrease as liquidity improves.
Meanwhile, a former CBN Director, told NAN that the apex bank made a big error by opening up the foreign exchange market.
He said, “ It is an error because the dollar, pound and euro is not our money, we only get dollars when we sell oil mainly.
“Our economy is not productive and we don’t have firms that manufacture non-oil goods services, export them and earn forex.
“So our naira is not convertible, in that case every country like ours will have what they called managed float.
“So when you come and put in more dollars because you have gotten more forex, these are very short term measures , they are not sustainable, so the problem is a supply and access problem,’’ he said.
