CBN may review items on forex restriction list

The Central Bank of Nigeria (CBN) may take another look at the list of the 41 products that it recently categorised as no longer eligible for foreign exchange in the interbank market or the Bureaux De Change (BDCs). The Director, Monetary Policy Department at the CBN, Mr. Moses Tule, dropped this hint at the private sector dialogue on the apex bank’s foreign exchange policy organised by the Lagos Chamber of Commerce and Industry (LCCI) in Lagos yesterday.

He spoke against the backdrop of complaints that the failure of the CBN to define the Harmonised System (HS) Code for the items would prevent some importers from accessing foreign exchange, thus leading to the closure of several businesses and the attendant loss of thousands of jobs. Tule pointed out that the major objective of the CBN in stopping the sale of forex to affected importers was to ensure the survival of the Nigerian economy. He stated that the regulator had little choice but to take the step, arguing that the rising demand for foreign exchange would have resulted in the depletion of the external reserves and the collapse of the economy. Tule lamented the import dependent nature of the country’s economy, pointing out that many of the items that are imported into the country can be produced locally.

The CBN Director noted that the regulator was concerned about rising unemployment in the country, stressing that the importation of items such as rice, cement, tooth pick and so on, boosts employment in their countries of origin while worsening the problem back home. He said: “The level of unemployment is worrisome. No economy is born by foreign exchange.

The level of economic activity creates foreign exchange and the economic activity must be such that economic agents must create foreign exchange agents and bring it back to the economy. If you keep taking water out of a bucket without putting some back, it would eventually become empty. An economy must first exist before you can have a CBN.”

He reiterated that the banking watchdog did not have the power to ban the importation of any item. As he put it, “We have not banned anything; we don’t have the power. All we are saying is that we don’t have enough foreign exchange to satisfy everybody.”

Rejecting recent criticism of the policy by The Economist magazine, Tule contended that the CBN was in a better position than the publication to appreciate the gravity of the situation that the country was contending with because it had all the relevant data. He revealed that between January and May this year, a total of $550million and $370million of the country’s external reserves was used to fund the importation of wheat and fish respectively.

The CBN top official also rejected criticism that the list contained not only finished products but also vital inputs, which many manufacturers needed to keep their factories running. He said: “If we begin to define what is input or finished goods, we will not stop anything. What is one person’s input might be another’s finished product. But I will take the issue of the definition of HS Codes back to Abuja.”