Amidst concerns over Nigeria’s trade deficit and a serial decline in exports, which peaked in 2022, stakeholders within the nation’s maritime industry have raised their voices, urging the Federal Government to reconsider the ban on 42 items restricted from accessing foreign exchange (forex).
In 2015, the Central Bank of Nigeria (CBN) classified 43 items as “Not Valid for Foreign Exchange”, on the grounds that they could easily be produced in Nigeria rather than being imported into the country.
Some of the affected items include rice, cement, margarine, palm kernel, palm oil products, vegetable oils, meat and processed meat products, vegetables and processed vegetable products, poultry, tomatoes/tomato paste, soap and cosmetics, and clothes.
Other items include private airplanes/jets, Indian incense, tinned fish in sauce, cold rolled steel sheets, galvanised steel sheets, roofing sheets, wheelbarrows, head pans, metal boxes/containers, enamelware, steel drums and pipes, wire mesh, steel nails, wood particle boards, and panels. Fertiliser and maize/corn were later added to the list.
The CBN, also last month re-emphasized that the 43 items on restriction remain banned, even from the newly-introduced Investors and Exporters (I&E) window.
Shipping Position Daily had reported last week that in 2022, Nigeria exported only about 434 products, while a huge number of 4048 different products came into the country through imports. This disparity has triggered alarms among industry experts, who stressed the need for measures to boost local production and also enhance export Nigeria’s capabilities.
Checks by our correspondent revealed that despite the CBN’s ban on forex for certain items, Nigerians still imported five items worth a staggering N543 billion in the first quarter of 2023. These items included crude palm oil, vegetable products, animal products, meat, and vegetable fats and oil.
Further scrutiny of the import and export data indicated that the importation of vegetable fats and oil accounted for N42.36 billion, while vegetable products accounted for N344 billion. Animal products also recorded significant trade at N122.47 billion, and mackerel meat imports alone amounted to N17.05 billion. These products originated from countries such as Chile, Ireland, Norway, South Korea, and the Netherlands.
Surprisingly, crude palm oil imports was N17.02 billion, with major trading partners being Malaysia and China.
Reacting to the embracing imports and the continued ban on these items, experts have expressed concerns over the impact of this policy on Nigeria’s exchange rate and overall economic growth.
Speaking recently at a meeting with members of the Association of Nigerian Licensed Customs Agents (ANLCA), a former Executive Secretary of Nigerian Shippers’ Council (NSC); Barr. Hassan Bello highlighted that huge trade imbalance have continued to hinder the nation’s progress towards self-sufficiency and sustainable economic growth.
Reacting to the low export recorded in 2022 and the 42 items that are banned, Dr. Muda Yusuf; CEO of the Centre for the Promotion of Private Enterprise (CPPE) in a chat with our correspondent stated that the exclusion of the 42 items from the foreign exchange market has led to policy contradictions and an increase in forex demand in the parallel market, leading to exchange rate disparities. He also noted that this policy inadvertently incentivizes false import declarations to circumvent the ban, exacerbating the situation.
In light of these concerns, he called on the government to re-evaluate the ban and identify items in which Nigeria has capacity to produce locally, encourage local production, so as to allow the pressure on the exchange rate be alleviated, thereby boosting the nation’s economic performance.
He explained that: “The exclusion of 42 broad categories of items from the foreign exchange market needs to be reviewed. First, it is a classic example of policy contradiction, lack of coherence and poor coordination. The items are not on the import prohibition list as documented by the fiscal policy authorities. Yet, the monetary authorities do not recognize the items for legitimate international trade transactions. This is a major conflict of policy. Trade policy matters are not within the remit of the CBN. It is the Finance Ministry that prepares the tariff book which documents tariffs on imports and outlines items prohibited from imports and exports.
“There is need for coordination and alignment between the monetary and fiscal authorities on this matter. The exclusion of the 42 items is a source of confusion in the trade policy space. Secondly, the policy is fueling forex demand in the parallel market, thus aggravating the rate disparity between the parallel market and the official window of the foreign exchange market.
“Thirdly, it incentivizes false declaration of imports to allow for import documentation. A good policy framework must be such that encourages honest declaration of imports.”
“Meanwhile, the monetary and fiscal authorities should work together to dispassionately review the 42 items and determine the ones in which we have the capacity to produce locally. We need such measures to ease the pressure on our exchange rate”, he suggested.
Speaking also in a chat with our correspondent, Sulaimon Ayokunle, the Public Relations Officer of the Association of Nigerian Licensed Customs Agents (ANLCA) at the PTML chapter, also noted the need for viable alternatives to the prohibited items and addressing the root causes of exchange rate pressure. He expressed concerns over porous borders, which enable some prohibited items to find their way into the country, leading to revenue losses for the Federal Government.
He stated that stakeholders’ collective call for a comprehensive review of forex policies will pave the way for a more sustainable and robust economy for Nigeria.
