Except those who are involved in the business of importation, not many people knew that the ban that the Central Bank of Nigeria (CBN) recently lifted had lasted for about eight years.
In 2015, the Central Bank of Nigeria (CBN) had 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. The apex bank was to add fertiliser and maize/corn later to the list.
The original intention of placing these items on the list was to manage foreign exchange and encourage domestic production.
Prior to the recent recant, the CBN had re-emphasized that the 43 items on restriction remained banned, even from the new Investors and Exporters (I&E) window.
This newspaper had once reported 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 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 has not had any significant effect on importation.
Of course, many stakeholders; especially the organised private sector have argued and anticipated 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.
Until, recently, the Central Bank of Nigeria (CBN) stubbornly insisted 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 were 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 proper rethink of the policy that has made our manufacturers to become scavengers for forex, in a bid to remain in business.
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 accounted for a huge chunk of our importation annually.
As a media organisation, we were not surprised that the Federal Government eventually reversed the policy. But since the reversal, we have equally noticed a divergence of opinion. While some stakeholders hailed the policy shift, some have also condemned it.
Leading the pack of critics are manufacturers, who argued that allowing unhindered access to the already strained importers/exporters forex window is a disaster waiting to happen. On the other hand, the informal sector importers who have complained serially about the forex ban, are full of appreciation to the government.
While not pitching our tent with either party, we are however of the strong position that, it is time Nigerian government re-jigged its policy and focused more on enhancing the capacity of local players to produce these contentious items? It is bad enough that we still import items like palm oil, vegetable oil, meat and even rice. These items can indeed be produced here. Nigeria had at a point in history produced them in abundance.
Our position is also that, continuing to put these items on the forex ban list may really not be necessary, because the forex market has now been liberalised. But, we caution that, leaving the importation window perpetually opened to every items will be injurious to our economy. No country does that!
The CBN’s decision to lift the ban on these items signifies a major step in resolving the country’s forex crisis.
Over the past months, the naira has depreciated unprecedentedly at both the authorised and unauthorised markets, after the Central Bank of Nigeria announced that it had collapsed all forex windows into the I&E window.
The move, according to the apex bank, is part of the Nigerian government’s efforts to improve liquidity and stability in the market and attract foreign investors into the Nigerian economy.
Although the policy was widely applauded as well-intentioned and necessary, it has put additional pressure on the local currency and manufacturers, with ripple effects on domestic prices.
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. They should be totally banned from being imported.
Perhaps, the appropriate thing at this point is a comprehensive review of the nation’s import policy and rejig of items on prohibition list.