The policy on restriction of allocation of foreign exchange for the importation of 43 items introduced by the Central Bank of Nigeria (CBN) under the Muhammadu Buhari administration in 2015 has been reversed.
The apex bank under the new management approved recently by the Bola Tinubu administration announced the reversal of the policy in a statement on Thursday by the Director of Corporate Communications, Isa AbdulMumin.
The Directors said the decision was part of a number of policies introduced by the bank to demonstrate its determination and commitment to boost liquidity in the capital market of the nation’s economy.
To conserve the foreign exchange used for the importation of the 43 items Nigeria had comparative advantage in producing locally, the CBN said the policy was introduced to promote their local manufacturing and backward integration to grow the economy.
The CBN said the policy, which was also to facilitate the resuscitation of domestic Industries and improve employment generation, affected items such as rice, cement, margarine, palm kernel/palm oil products/vegetables oils, meat and processed meat products, vegetables and processed vegetable products, poultry – chicken, eggs, turkey, private airplanes/jets, indian incense, tinned fish in sauce (geisha)/sardines, cold-rolled, steel sheets, galvanised steel sheets, and roofing sheets.
Other items affected included wheelbarrows, head pans, metal boxes and containers and enamelware, steel drums, steel pipes, wire rods (deformed and not deformed), Iron rods and reinforcing bars, wire mesh, steel nails, security and razor wire.
The apex bank also restricted allocation of FOREX for the importation of wood particle boards and panels wood fibre boards and panels, plywood boards and panels, wooden doors, furniture, toothpicks, glass and glassware, kitchen utensils, tablewares, tiles – vitrified and ceramic, textiles, woven fabrics, clothes, plastic and rubber products, polypropylene granules, cellophane wrappers, soap and cosmetics, tomatoes/tomato paste, Eurobond/foreign currency bond/ share purchases
dairy/milk and maize.
Under the policy, the CBN said although the importers of these items were barred from accessing supply of FOREX at official market rates, they were free to mobilise supply from other available sources to finance their importation activities.
However, after the implementation of the policy for the past eight years without a commensurate impact on the economy, the CBN said it has now been reversed to allow importers of the items previously restricted by the 2015 Circular No. TED/FEM/FPC/GEN/01/010 and its addendums to purchase FOREX in the Nigerian Foreign Exchange Market.
The CBN said lifting the restriction was in continuation of its efforts to sustain the stability of the foreign exchange market and ensure the efficient utilization of foreign exchange the derivation of optimum benefit from goods and services imported Into the country.
The revised policy, the CBN clarified, was part of its commitment to boost liquidity in the FOREX market and to promote orderliness and professional conduct by all participants in the Nigerian Foreign Exchange Market to ensure market forces determine exchange rates on a Willing Buyer – Willing Seller principle.
Reiterating the directive that the prevailing FOREX rates should be referenced from platforms such as the CBN website, FMDQ, and other recognised or appointed trading systems, the CBN said this would promote price discovery, transparency, and credibility in the FX rates.
As part of its responsibility to ensure price stability, the CBN said it would continue to boost liquidity in the Nigerian Foreign Exchange Market by intervening from time to time.
“As market liquidity improves, these CBN interventions will gradually decrease,” it said.
The CBN reassured that it was committed to accelerate efforts to clear the FX backlog with existing participants and will continue dialogue with stakeholders to address the issue.
Apart from setting as one of its goals the attainment of a single FX market, the CBN said consultations were ongoing with market participants to achieve stability.
It urged participants and the general public to be guided by the new policy diractive to reinvent the economy on the path of sustainable growth.