In Five Years, Nigeria’s Revenue Declined by $1.4bn
The Governor, Central Bank of Nigeria (CBN), Dr Olayemi Cardoso, has revealed that the country’s revenue suffered a significant drop of approximately $1.4 billion, or $275 million annually, between 2015 and 2019 at a time when the 43 items were restricted.
This was even as he stated that there was a 51.0 per cent increase in trade evasion by importers accessing the foreign exchange market, which resulted in the decline in revenue generated by the country.
Cardoso disclosed this while delivering his keynote economic roadmap at the annual Bankers’ Dinner of the Chartered Institute of Bankers of Nigeria (CIBN) tagged, “The Governors’ Day” in Lagos at the weekend.
The apex bank had 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.
But the bank on October 12 2023, announced that it had lifted the ban on the issuance of foreign exchange for the importation of rice, vegetable oil, and poultry products among other 43 items.
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Providing further clarification on the issue of the 43 items, Cardoso said the 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 (NFEM) and widening the premium between the parallel and official market.
He 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, resulting in a revenue drop of approximately US$1.4 billion, or US$275 million annually, between 2015 and 2019.
Additionally, 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 US$680 million could have been earned in the same year”.
“Moreover, 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. Lastly, it is important to note that trade policy is primarily the responsibility of the fiscal authorities, and delving into such matters falls outside the purview of the CBN”, he stated.
He noted that Central banks are known as banks of last resort because they underpin the financial system while adding that the new management at the bank is irrevocably committed to ensuring price stability and financial system sustainability.
“We will stand by Nigeria and Nigerians. Our actions will be fully guided by the principles of transparency, responsibility, and a deep commitment to Nigeria’s progress”, the CBN governor said.
