Reports have it that the Central Bank of Nigeria (CBN) has lifted the ban on 43 items imposed under the Godwin Emefiele era. The current lifting was disclosed in a circular by the apex bank released on October 12, 2023.
According to the central bank, it will also boost liquidity in the Nigerian Foreign Exchange Market and intervene from time to time, stating that interventions will decrease as liquidity improves. The 43 Items are Rice, Cement, Margarine, Palm Kernel/Palm oil products/vegetable oils, Meat and, Processed Meat Products, Vegetables and Processed Vegetable Products, Poultry – chicken, eggs, Turkey
Private Airplanes/Jets
Indian Incense
Tinned Fish In sauce (Gelsha)/Sardines
Cold Rolled Steel Sheets
Galvanized Steel Sheets
Roofing Sheets,Wheelbarrows
Head Pans
Metal Boxes and Containers
Enamelware
Steel Drums
Steel Pipes
Wire Rods (deformed and not deformed)
Iron Rods and ReInforcina Bars
Wire Mesh
Steel Nalls
Security and Razor Wire
Wood Particle Boards and Panels
Wood Fiber Boards and Panels
Plywood Boards and Panels
Wooden Doors
Furniture
Toothpicks
Glass and Glassware
Kitchen Utensils
Tableware
Tiles – vitrified and ceramic
Textiles
Woven Fabrics
Clothes
Plastic and Rubber Products, Cellophane Wrappers
Soap and cosmetics
Tomatoes/Tomato Pastes
Euro bond/Foreign Currency Bond/Share
Purchases
Milk
Maize
Note: While the list is 43, each item on the list includes several other sub-items as captured by the Nigerian Customs using their import codes list.
Under the new guidelines, the CBN said it will be championing the ‘Willing Buyer – Willing Seller’ principle, emphasizing its commitment to a market-driven exchange rate system.
It also said to avoid potential misinformation, participants are advised to reference foreign exchange rates only from official platforms such as the CBN website, FMDQ, and other recognized trading systems. Important to add that the disparity between the official and parallel market rates stands at a whopping 25%.
In a move to stabilize the market, the bank will intermittently boost liquidity in the Nigerian Foreign Exchange Market. The frequency of these interventions is expected to decline as market stability improves.
The CBN has also lifted prior restrictions, enabling importers of 43 items, previously barred by a 2015 Circular, to now access the Nigerian Foreign Exchange Market.
Addressing the longstanding FX backlog issue, the CBN pledged to intensify efforts for its clearance and further engage with stakeholders to streamline solutions.
Reflecting a broader vision, the bank also indicated its pursuit of a unified foreign exchange market, with consultations already underway with market players.
The decision of the central bank decision to lift the ban on 43 items signifies a major step in resolving Nigeria’s forex crisis as most critics had called on the CBN under Emefiele to lift it..
The 43 banned items include a list of imports that were not allowed access to forex from official sources since 2015. However, some of the items remain on the ban list of customs and it is unclear if they will be funded for forex
purchases.
It is also unclear how much demand this will drive to the official I&E window and if the central bank has the capacity to meet this demand in the short term until liquidity returns as it claimed.
On CBN’s intervention: The central bank’s decision to intervene in the forex market suggests it is now ready to provide a steady supply of forex in the official market, a situation that could strengthen the exchange rate at the black market.
However, it is unclear where the central bank will find forex to fund the demand considering its external reserve position is already stretched.
The average daily turnover for forex was around $103 million, significantly small to meet demand.
Most supply currently goes to the black market and will remain so if the exchange rate disparity remains above 5%.
The CBN also has a forex backlog of around $8 billion and another $20 billion in swaps with Nigerian banks.
Analysts opine that the swaps might be pushed back to accommodate the apex bank’s cash flows even if it means more windfall forex profits for banks.
On referencing quotes foreign exchange rates only from official platforms such as the CBN website, FMDQ,
The central bank did not state if it plans to adjust the exchange rate on the FMDQ in line with market realities.
As earlier stated the exchange rate disparity between the official and black market rates is a whopping 25%.