It is quite encouraging that the Central Bank of Nigeria (CBN) has made it clear that the ban it placed on 41 items that are not eligible for foreign exchange is still in place as the policy has not been reversed.
A statement issued recently in Abuja by CBN said that media reports indicating otherwise are false and that it has not reversed its policy on the 41 items ineligible for forex through the Nigerian forex market.
The reports seemed to be a misinterpretation of a statement coming from the CBN regarding revised documentation requirements for allocation of foreign exchange for small-scale Importation to the effect that importers of items classified as ‘ineligible for Forex’ with transactions value of $20,000 and below per quarter shall now qualify for allocation of foreign exchange subject to the completion of form Q.
It is now clear that this provision does not refer to the 41 items that remain ineligible for forex sale in the Nigerian forex market. Recall that at the time the 41 items were screened out of the official foreign exchange window, the justifications for doing so were well accepted and no rational person could fault them.
Till today and most certainly for many years to come, those justifications will remain fault-free. Thus, it will amount to constraining the capacity of this country to become a value-adding productive one if that policy is suddenly changed for any reasons. So, the recent reaffirmation by the apex bank that the policy remains in place is good news.
A major policy the CBN came up with not too long ago, was the barring of importers of some 41 items from accessing foreign exchange through the official CBN window. Some of the affected items included, textiles, wheelbarrows and kitchen utensils, rice, rubber products, textiles, etc.
The measure was expected to, among other things, reduce the demand for foreign exchange and indeed, cause production of the 41 items domestically, in order to save some foreign exchange. Several stakeholders in the economy commended the CBN and supported the initiative. They also enjoined the CBN to ensure full and strict implementation of the policy.
However, some of the organized private sector operatives, such as the Manufacturers Association of Nigeria (MAN), Lagos Chambers of Commerce and Industry (LCCI) did not buy into the policy claiming that it would adversely affect their members’ production.
At every opportunity, MAN, LCCI and others demanded a reversal of the policy. Unfortunately for the CBN and the country, that policy and others put in place have not been able to save the nose-diving foreign exchange rate. Instead, the situation worsened against internationally traded currencies.
So the speculations that the CBN might reverse the policy and permit or allow importers of the earlier disqualified 41 items access to the official foreign exchange market has now been refuted and the matter effectively put to rest.
If the CBN had yielded to the various lobbies for the re-admittance of the 41 items into the official foreign exchange market, then suggestions that the independence of the CBN is only on paper would, no doubt, have received credibility. It will also confirm that prevalent policy changes by the government and most of its agencies have caught up with the CBN too.
This will be very unfortunate for the nation as it will worsen the growing of lack of confidence by local and international investors and other market players in the Nigerian economy.
Our position on this issue is stated clearly that, re-enlisting the items for official foreign exchange will do no good to this nation and its people. If this country, blessed in many respects including human capacity, cannot at its present stage of development produce all the 41 items domestically, then the future is very bleak.
These worries today about exchange rate will become a child’s play in a few years from now, if the country fails to pursue policies that will facilitate domestic production.
If progress would be made in the area of foreign exchange earnings to enhance Nigeria’s foreign reserves and rate, a major step is to produce, not just for domestic consumption but also for export. Therefore, Nigeria must stay away from imports, such as the CBN’s 41 items, that the nation has the capacity to produce locally.