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 are – 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 original intention of placing these items on the list was to manage foreign exchange and encourage domestic production.
After eight years of enforcement, the CBN also recently re-emphasized that the 43 items on restriction remain banned, even from the newly-introduced Investors and Exporters (I&E) window.
This newspaper had reported penultimate week that in 2022 alone, 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.
It surprising and also a call for concern that despite the CBN’s ban on forex for these items, Nigerians have been importing them steadily. In fact, Nigerian imported only five of the items at a staggering N543 billion in the first quarter of 2023 alone. 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 worth N17.02 billion was imported from Malaysia and China.
It is also noteworthy that even the recent exchange rate unification policy of the current administration which removed the huge disparity between the official exchange rate and the black market rate.
Of course, many stakeholders, especially the organised private sector have argued that the emergence of the Import and Export Foreign Exchange window (I&E FX window) would lead to the removal of restrictions on the 43 imported items, the Central Bank of Nigeria (CBN) has clarified that the items remained restricted from accessing foreign exchange (FX) through the official window.
We think that it should worry government that despite the ban, more than70 percent of manufacturers are resorting to accessing FX through unofficial channels, largely because it is scarce. Most striking is the fact that the manufacturers have become desperate and are sourcing for forex for these items due to the need to be in business, but also because these items are on the CBN’s list of ineligible items for the official FX window.
While we are fully in support whatever the federal government is doing to stabilize the economy, we call for a rethink of the policy that has made our manufacturers to become scavengers for forex, in a bid to remain in business.
If these items have been banned from accessing forex through the official window, yet the items are still being imported on a large scale, does it not call for review of our policies?
Despite the ban on items such as 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, they still account for a huge chunk of our importation annually.
Our reference is the statistics that was rolled out above, which revealed that between January and March alone, Nigerian imported only five of the items at a staggering N543 billion. These items included crude palm oil, vegetable products, animal products, meat, and vegetable fats and oil.
The question is: Is it not time Nigerian government re-jigged its policy and focus more on enhancing the capacity of local players to produce these items? It is bad enough that we still import items like palm oil, vegetable oil, meat and even rice. These items can be produced here.
However, continuing to put these items on the ban list may really not be necessary, because the forex market has now been liberalised. But, leaving the window perpetually opened to every items will be injurious to our economy. No country does that!
Perhaps, the appropriate thing at this point is a review of the nation’s import policy and rejig items on prohibition list.
Finally, even as we support that items which can be successfully produced in the country should not access forex from the nation’s official source, we strongly advocate that, concerted efforts should be on boosting local production, especially of food and related items that we still import.
