The Central Bank of Nigeria (CBN) has announced the removal of 43 items from FX restriction, a move geared towards facilitating a vibrant FX market.
The decision was disclosed in a circular signed by Isa AbdulMumin, Director of Corporate Communications, and was released on Thursday.
The circular reads:
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1. The Central Bank of Nigeria (CBN) will continue 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.
2. The CBN reiterates that the prevailing Foreign Exchange (FX) rates should be referenced from platforms such as the CBN website, FMDQ, and other recognized or appointed trading systems to promote price discovery, transparency, and credibility in the FX rates.
3. As part of its responsibility to ensure price stability, the CBN will boost liquidity in the Nigerian Foreign Exchange Market by interventions from time to time. As market liquidity improves, these CBN interventions will gradually decrease.
4. Importers of all the 43 items previously restricted by the 2015 Circular referenced TED/FEM/FPC/GEN/01/010 and its addendums are now allowed to purchase foreign exchange in the Nigerian Foreign Exchange Market.
5. The CBN is committed to accelerating efforts to clear the FX backlog with existing participants and will continue dialogue with stakeholders to address the issue.
6. The CBN has set as one of its goals the attainment of a single FX market. Consultation is ongoing with market participants to achieve this goal.
Participants and the general public are to be guided by the above.
Financial experts have criticized the CBN’s delay in removing the 43 items, saying it is an indication that the naira was only devalued and not floated as the apex bank announced in June.
Former CBN governor Godwin Emefiele imposed the FX restrictions on the 43 items as part of his policies aimed at taming Nigeria’s volatile forex market. However, the move drew severe criticism from business leaders.
Below is the list of the 43 items:
- 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
These 43 main items, which include various sub-items categorized by their respective import codes as designated by the Nigerian Customs, have been restricted from accessing foreign exchange through the Investor & Exporter window. This measure aims to encourage local production and reduce their impact on the scarcity of the U.S. dollar in the country.
However, doubts have trailed the CBN’s promise to ensure adequate FX liquidity through interventions. This is because the Nigerian government is currently looking for funds to boost its dollar supply.
In August, the Nigerian National Petroleum Company Limited (NNPCL) secured a $3 billion emergency crude oil-backed loan from the Afreximbank. However the government’s plan to strengthen the naira through a loan from Afrexim Bank has not materialized yet, as the pan-African bank is reportedly seeking buyers for the oil to generate funds to support the loan.
—Press release
CBN Restates Commitment To Boost Liquidity in FOREX Market
- The Central Bank of Nigeria (CBN) will continue 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.
- The CBN reiterates that the prevailing Foreign Exchange (FX) rates should be referenced from platforms such as the CBN website, FMDQ, and other recognised or appointed trading systems to promote price discovery, transparency, and credibility in the FX rates.
- As part of its responsibility to ensure price stability, the CBN will boost liquidity in the Nigerian Foreign Exchange Market byinterventions from time to time. As market liquidity improves, these CBN interventions will gradually decrease.
- Importers of all the 43 items previously restricted by the 2015 Circular referenced TED/FEM/FPC/GEN/01/010 and its addendums are now allowed to purchase foreign exchange in the Nigerian Foreign Exchange Market.
- The CBN is committed to accelerating efforts to clear the FX backlog with existing participants and will continue dialogue with stakeholders to address the issue.
- The CBN has set as one of its goals the attainment of a single FX market. Consultation is ongoing with market participants to achieve this goal.
Participants and the general public are to be guided by the above.
Isa AbdulMumin PhD Director, Corporate Communications
October 12, 2023