The Central Bank of Nigeria (CBN) has again, tighten the noose on the economy by denying importers of certain goods access to foreign exchange at the official market, emphasizing the need to curtail indiscriminate importation of some goods that could be produced.
The list of forty one items, including rice, cement, margarine, palm kernel/palm oil products/vegetable oil, meat and processed meat products, vegetable and processed vegetable products, poultry –chicken, eggs, turkey – private airplanes/jet, Indian Incense, tinned fish in sauce – Geisha/Sardines, cold rolled steel sheet and galvanized steel sheets.
Others are roofing sheets, wheel barrows, head pans, metal boxes and containers, enamelware, steel drums, steel pipes, wires, rods, wire mesh, steel nails, security and razor wire, wood particles boards and panels, wood fibre board and panels, plywood boards and wooden doors. In addition, sourcing of forex for the importation of toothpicks, glass and glassware, kitchen utensils, tables, textiles, woven fabrics, clothes, plastic and rubber products, soap and cosmetic, tomatoes/tomato paste and Eurobond/foreign currency bond/share purchase has been prohibited.
A circular on this policy explained “The implementation of the policy will help conserve forex reserves as well as facilitate the resuscitation of domestic industries and improve employment generation,” it added.
CBN Governor, Godwin Emefiele hinted the need for the action earlier in January this year while speaking at a forum in Lagos, saying that “the only thing that will reduce pressure on our currency is by producing those things we are importing today. We have seen the pressure in the forex market arising mostly for the lopsided dependence on imports. Today in Nigeria, toothpick, tomato paste, furniture, rice, sugar, fish and petroleum products are all being imported. We will try as much as possible not to hurt your business, but we need to be able to work together,” he had told the gathering of CEOs of firms in the country.
Economic effects that would accompany the policy have started manifesting at parallel market with a dollar exchange averaging N241 against N210 before the new policy was announced, at the time of filing this report. Stakeholders are sharply divided over the decision with some theorizing that the CBN’s move was a good one delivered at a wrong time. Some analysts insisted that prior to such decisions government should have improved the structural weaknesses and inadequate public infrastructure that is inhibiting growth of the nation’s business atmosphere.
Reacting to the development in a communiqué issued and signed by its Director General, Mr. Muda Yusuf, after meeting with CBN officials on the matter in Lagos, the Lagos Chamber of Commerce and Industry (LCCI), said, “many of the restricted items are irreplaceable raw materials in the manufacturing process of many industries and this policy will cause significant damage to the Nigerian manufacturing sector and the economy”.
While soliciting a review of the policy because of its impact on employment and inflation, the Chamber said: ‘’We urge the CBN to immediately amend the policy with full product definition and specification of all restricted items, including HS Codes and excluding any items, which are non-substitutable industrial raw materials from the list.’’
Criticizing the new limit while speaking with Economic Confidential, Alhaji Akilu Maishada, a textile importer at the popular Kanttin Kori textile market in Kano said, “there will be problem along the chain of demand and supply in the textile market soon because many people, especially rich ones, use to demand for special fabrics that are majorly imported so, the consequence of the forex limitation on fabric importation is that consumers have to pay more. It is not easy sourcing for foreign currency outside official market to finance importation.”
Expressing her discontentment, Managing Director of Roahalide Nigeria Limited, Garki Modern Market, Abuja, Hajiya Ayodele who is a wholesaler and distributor of tinned fish in sauce – Geisha/Sardines said, “Though effect of the new CBN’s forex policy has not manifested in market price of the goods yet, the consequence of it cannot be contemplated. Price of a pack of Sardine remains five thousand two hundred naira as it was but few days ago, it may increase more than what we think as result of difficulties that importers will face in sourcing for dollars outside official market.”
Another businessman, Mr. Chukwuemeka John said his business was in double jeopardy with the new limitations because he was still contending with challenges of earlier limitation put on naira debit card outside the country by the apex bank. Insisting “the idea of the debit card limit to $50,000 per person per annum was discomforting, John told this magazine “I travel out often to get items for my trade and that aside, I spend money on vacations using a Naira debit card. So with this new limit on debit card, how am I going to keep up with my business and personal foreign exchange needs while I am overseas? I wish the implementation of the policy could be re-adjusted if possible to help businessmen like me.”