Mr. Olayemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), explained the rationale behind the decision to lift the restrictions on access to foreign exchange for the importation of 43 items, including rice.
Speaking at the 58th Annual Bankers’ Dinner organized by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos, Cardoso emphasized that there was no evidence that the previous restrictions had positively impacted the general populace or the economy.
Contrary to the belief that the 43 items were explicitly prohibited, Cardoso clarified that they were never explicitly prohibited from importation or sale in Nigeria.
He argued that the restrictions had adverse effects, contributing to inflationary pressures and a drop in revenue.
Cardoso highlighted that during the period of restrictions, there was a 51.0% increase in trade evasion, leading to a significant revenue drop of approximately $1.4 billion between 2015 and 2019.
He also pointed out a decrease in tariff revenue from goods, highlighting the potential loss of revenue.
The CBN Governor stated that the reduction in trade restrictions on items like rice, sugar, and wheat had only minimal impacts on welfare, with a 0.8% improvement and a 0.4% reduction in extreme poverty. He argued that the benefits of trade gains for the general population were negligible, as the average industry in Nigeria paid 13.7% more for its inputs.
Cardoso stressed that lifting the foreign exchange restrictions aimed to boost liquidity in the Nigerian foreign exchange market, and interventions would decrease as liquidity improved.
He emphasized that the issue of trade policy, specifically the importation and sale of the 43 items, fell within the domain of fiscal authorities, not the CBN, clarifying that the decision was not intended to encroach upon the responsibilities of other government agencies.
The CBN had initially published a list of 41 imported goods and services ineligible for foreign exchange in 2015, later updated to include two more items.
The recent decision to lift the ban on the issuance of foreign exchange for the importation of several items, including rice, vegetable oil, and poultry products, was announced on October 12, 2023.
In response to the decision, former CBN Director Prof. Akpan Ekpo expressed concerns, calling it an error and emphasizing the need for a sustainable solution to the supply and access problem in the foreign exchange market.
