The Governor of the Central Bank of Nigeria, CBN, Olayemi Cardoso, has stated that the 43 items were never explicitly prohibited from importation or sale in Nigeria. Speaking at the 58th Annual Bankers’ Dinner organised by the Chartered Institute of Bankers of Nigeria, CIBN, in Lagos, Mr Cardoso explained that while these items were not banned, the apex bank had imposed restrictions on accessing foreign exchange for their importation.
It is noteworthy to emphasize that the trade policy concerning the importation and sale of the 43 items falls under the jurisdiction of the fiscal authorities, rather than the CBN. Mr Cardoso made this clarification to delineate that the CBN’s decision to lift the foreign exchange restrictions was not intended to encroach upon the responsibilities of other government agencies.
The CBN, in a circular dated June 2015, originally listed 41 imported goods and services that would not be eligible for foreign exchange in the Nigerian foreign currency market. However, the list was later updated to include two more items. On October 12, 2023, the CBN officially lifted the ban on the issuance of foreign exchange for the importation of rice, vegetable oil, poultry products, and 40 other items.
Furthermore, Mr Cardoso highlighted the adverse impact of these restrictions, revealing that studies had shown a 51.0 per cent increase in trade evasion by importers accessing foreign exchange for the importation of these items during the period of restriction. This resulted in a significant revenue drop, amounting to approximately $1.4 billion, or $275 million annually, from 2015 to 2019.
Moreover, revenue from tariffs on goods declined from a high of approximately $920 million in 2011 to about $250 million in 2017. In 2019, the actual tariff on goods was $320 million, but evidence suggests that as much as $680 million could have been earned in the same year.
Mr Cardoso further explained that the foreign exchange restrictions had an adverse impact on Nigerian households, contributing to inflationary pressures. The reduction in trade restrictions and levies on rice, sugar, and wheat by 50.0 per cent had minimal impact on welfare, with only a 0.8 per cent improvement and a mere 0.4 per cent reduction in extreme poverty.
Additionally, the CBN emphasized that the decision to lift the foreign exchange restrictions would boost liquidity in the Nigerian foreign exchange market. However, a former CBN Director, Prof. Akpan Ekpo, cautioned against this decision, citing that the opening up of the foreign exchange market was not a sustainable measure due to the country’s non-productive economy and lack of firms that manufacture non-oil goods for export.
Ultimately, the clarification provided by CBN Governor Cardoso sheds light on the nuanced nature of the foreign exchange restrictions on the 43 items, and the potential implications of lifting these restrictions on the Nigerian economy.
