43 items are not completely banned, Cardoso clarifies
The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, has clarified that the 43 items were never explicitly prohibited from being imported or sold in Nigeria.
Mr. Cardoso made this explanation at the 58th Annual Bankers Dinner organized by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos on Friday. However, he explained that the apex bank has placed restrictions on access to foreign exchange for import of these goods. .
Cardoso emphasized that trade policy issues, especially the import and sale of the 43 items, primarily fall within the jurisdiction of the fiscal authority and not the CBN.
He said this distinction is important as it makes clear that the CBN’s decision to lift foreign exchange restrictions on these items is not intended to infringe on the responsibilities of other government agencies. .
According to a report by the News Agency of Nigeria (NAN), the CBN in a June 2015 circular published a list of imported goods and services that are not eligible for foreign currency exchange in the Nigerian foreign exchange market.
The original list of 41 items has been updated to include two more items. However, on October 12, 2023, the CBN announced that it had lifted the ban on issuance of foreign currency for the import of rice, vegetable oil, and poultry products. 43 other items. Mr Cardoso said: “Please allow me to further explain the issue of 43 items.
“First, it is important to note that these items have not been completely banned by the government.
“The CBN had imposed restrictions on access to foreign currency in the official market.
“However, these restrictions increased the demand for foreign exchange in the parallel market, leading to a depreciation of the exchange rate in that part of the Nigerian foreign exchange market and widening the premium between the parallel market and the official market.”
Cardoso said the study showed that trade avoidance by importers accessing the foreign exchange market increased by 51.0% during the period when 43 items were restricted.
He said this resulted in a revenue decline of about $1.4 billion from 2015 to 2019, or $275 million annually.
Cardoso added that revenue from tariffs on goods has fallen from a high of about $920 million in 2011 to about $250 million in 2017.
“Actual goods tariffs in 2019 were $320 million, but counterfactual evidence suggests it could have earned as much as $680 million that year,” he said. He added that evidence shows that foreign exchange controls are having a negative impact on Nigerian household budgets and contributing to inflationary pressures.
Cardoso said the 50.0% reduction in trade restrictions and levies on rice, sugar and wheat had minimal impact on welfare, improving by 0.8% and reducing extreme poverty by only 0.4%.
Cardoso explained that the average Nigerian industry pays 13.7 percent more for inputs, so the benefits of trade gains for the general public are negligible.
The CBN said the measures will increase liquidity in the Nigerian foreign exchange market and will intervene from time to time, adding that as liquidity improves, interventions will reduce.
Meanwhile, former CBN director, Professor Akpan Ekpo, told NAN that the apex bank made a big mistake in opening up the foreign exchange market.
He said: “This is wrong because dollars, pounds and euros are not our money. We only get dollars mainly when we sell oil.”
“Our economy is not productive and there are no companies producing and exporting non-oil products and services to earn foreign exchange.
“So our naira is not convertible and in that case any country like us would have what is called a managed float.
“So even if you come and put in more dollars just because you get more foreign exchange, these are very short-term measures and they are not sustainable, so the problem is supply and access. “It’s a problem,” he said.
Source: guardian.ng