Following the decision of the Federal Government to discontinue the forex exclusion policy on 41 items, a wide range of reactions from stakeholders have emerged, underlining the complexity of the economic and political implications of this significant policy shift.
Recall that the Central Bank of Nigeria (CBN) recently lifted the foreign exchange restrictions it placed on importers of 43 items about eight years ago.
The CBN had in the statement signed by its Director of Corporate Communications, Dr. Isa AbdulMumin, said this is a significant change to the foreign exchange market policy.
According to the apex bank, the action will boost liquidity in the Nigerian foreign exchange market and intervene from time to time, stating that interventions will decrease as liquidity improves.
However, following the decisions, stakeholders in the nation’s maritime industry and Organised Private Sector (OPS) have expressed divergent views regarding the decision.
The Chief Executive Officer of the Center for Promotion of Private Enterprises (CPPE); Dr. Muda Yusuf welcomed the decision, viewing it as a step in the right direction; he said the decision will contribute to the normalization of economic policies.
He added that the exclusion of these items had led to distortions in the forex market, divergence in exchange rates, and was inconsistent with trade policies. He further said the removal of the ban is a way to enhance transparency and disclosures in forex transactions, with a call for the CBN to avoid suppressing the market.
According to him, “the exclusion was in conflict with extant trade policy as the items were not under import prohibition in the first place. It was an example of lack of policy coordination under the previous administration. The new directive will also improve transparency and disclosures in foreign exchange transactions”.
“Meanwhile, the CBN should avoid market suppression tendencies, especially outside the I and E Window. All policy impediments to forex inflows should be removed. The fiscal authorities should continually monitor the economic landscape to shape the character of fiscal policy measures to regulate imports in line with comparative advantage principles.
“We need to worry about the risk of import surge. There is also need to upscale the use of fiscal policy measures to boost domestic production and productivity” he said.
On the other side, Mr Lekan Adewoye, Vice Chairman of the Basic Metal, Iron, and Steel Products sector of the Manufacturers Association of Nigeria (MAN), criticized the decision, urging the government to reverse it. He fears that the sudden policy reversal could lead to job losses, insecurity, and an economic collapse.
Adewoye argued that the abrupt change could hurt manufacturers who invested in backward integration and undermine the competitiveness of local industries, pointing out that a lack of consultation and policy somersaults have contributed to the industry’s challenges.
On his part, Mr Remi Ogunmefun, former MAN DG, emphasized the lack of consultation when the ban was initially introduced. He noted that the abrupt nature of the policy had negatively impacted manufacturers. While expressing uncertainty about the basis for reversing the ban, he raised concerns about the potential for increased competition for foreign exchange, which could affect the industry.
Speaking also former Acting President of the Association of Nigerian Licensed Customs Agents (ANLCA), Dr. Kayode Farinto argued that the CBN should not interfere with fiscal policies and that placing restrictions on the 41 items had encouraged false declaration and reduced imports, which he believed had already dropped significantly. He advocated for an open system with no barriers to trade.
On his part, Mr John Aluya, Vice President of MAN, criticized the initial implementation of the policy, suggesting it was done without adequate analysis. He highlighted that the ban had led to a significant increase in the prices of essential goods like rice.
Aluya also pointed out that the I&E window had effectively been hijacked by banks, undermining its intended purpose.