The Governor of the Central Bank of Nigeria (CBN), Mr Olayemi Cardoso, stated that the restrictions imposed by the apex bank on accessing foreign exchange for importing 43 items did not positively affect the economy or the general population. He pointed out that these restrictions actually had adverse effects on Nigerian households, contributing to inflationary pressures.
Speaking at the 58th Annual Bankers’ Dinner organized by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos, Cardoso defended the CBN’s decision to lift the restrictions on accessing foreign exchange for the 43 items introduced by his predecessor. He clarified that contrary to public belief, these items were never explicitly prohibited from importation or sale in Nigeria.
Cardoso highlighted that these restrictions led to increased demand for foreign exchange in the parallel market, causing the exchange rate to depreciate and widening the gap between the parallel and official markets. He mentioned that studies revealed a significant 51.0% increase in trade evasion during the period of restrictions, resulting in a substantial drop in revenue.
Additionally, he noted a decrease in revenue from tariffs on goods and emphasized that the reduction in trade restrictions on certain items had minimal impact on welfare and poverty reduction. The CBN Governor explained that the benefits for the general population were marginal, with industries in Nigeria facing higher input costs.
Cardoso clarified that while the CBN had implemented restrictions on accessing foreign exchange for these items, the responsibility for trade policy, particularly regarding the importation and sale of the 43 items, primarily lies with fiscal authorities, not the CBN.
The recent announcement on October 12, 2023, by the CBN to lift the ban on issuing foreign exchange for the importation of rice, vegetable oil, and poultry products, among other 43 items, was made in light of these considerations to boost liquidity in the Nigerian foreign exchange market.
Meanwhile, former CBN Director Prof. Akpan Ekpo criticized the apex bank’s decision, considering it a mistake to open up the foreign exchange market. He highlighted the non-productive nature of the Nigerian economy, lacking firms that manufacture non-oil goods and services for export, leading to supply and access problems regarding foreign exchange.