The Central Bank of Nigeria (CBN) has announced that it has lifted an eight-year ban on 43 items that had previously been restricted from accessing forex. In June 2015, the apex bank announced that some 41 items were “Not Valid for Foreign Exchange” because they could easily be produced in Nigeria rather than being imported into the country. Because of the ban, importers of these goods had to seek foreign exchange on the black market, where the exchange rate was typically higher than the official rate.
According to CBN, the policy would contribute to conserving foreign reserves while simultaneously stimulating the revival of domestic industries and fostering increased employment opportunities. Despite this policy, Nigeria still faces a significant foreign currency shortage, leading to the naira hitting historic lows on the unofficial market. In the unofficial parallel market, the naira witnessed a decline to ₦1,040 per dollar. This depreciation trend was also observed in the official market, where the exchange rate stood at ₦776.
Investor FX window was created in 2015 for stakeholders.
Initially, the list contained 41 items when it was first announced, but the Central Bank later expanded it to include two additional items in 2018 and 2020 respectively. Now made up of 43 items, each entry on the list included various sub-items, as identified by the Nigerian Customs Service through their import codes list. Importantly, the presence of an item on this list does not imply an outright ban on its importation. Rather, these items are restricted from accessing forex through the official investor and exporter window.
This window was established on April 21, 2017 by the mother bank. It was in a continuing effort to deepen the foreign exchange market and accommodate all FX obligations. It was meant for Investors, Exporters and End-users, according to CBN official memo to all authorized dealers. The purpose of the window is to boost liquidity in the FX market and ensure timely execution and settlement for eligible transactions. Specifically, the supply of foreign currency to the window was only through portfolio investors, exporters, authorized dealers and other parties with foreign currency to exchange to naira. The CBN was also a market participant at this window to promote liquidity and professional market conduct.
New governor restates pledge to clear the bank’s forex backlogs.
In the statement signed by Isa AbdulMumin, the Director of Corporate Communications at CBN, the regulator expressed its commitment to promoting orderliness and professional conduct by all market participants to ensure market forces determine exchange rates on a “willing buyer-willing seller” principle. According to the statement, 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.
“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 statement read. The new CBN governor, Olayemi Cardoso, also restated a pledge to quickly clear the bank’s backlog of unsettled forex obligations to local lenders. The financial institution also mentioned that one of its objectives is to establish a unified foreign exchange market. It further noted that ongoing consultations with market participants are being conducted to work towards this goal.
List of all the 43 items whose ban was lifted.
Here is the list of the 43 items that had previously been restricted from accessing forex: 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 and jets, Indian incense, tinned fish in sauce (Geisha) and sardines, cold rolled steel sheets, galvanized steel sheets, roofing sheets, wheelbarrows, maize, head pans, metal boxes and containers, enamelware, steel drums, steel pipes, wire rods (deformed and non-deformed), iron rods and reinforcing bars, wire mesh, steel nails, security and razor wire, wood particle boards and panels, wood fiber boards and panels, plywood boards and panels, wooden doors, milk, furniture, toothpicks, glass and glassware, kitchen utensils, tableware, tiles (vitrified and ceramic), textiles, woven fabrics, clothes, plastic and rubber products as well as cellophane wrappers, and soap and cosmetics.