CONTRARY to expectations by a section of the organised private sector that the exchange rate unification policy of the current administration would lead to removal of restrictions on 43 imported items, the Central Bank of Nigeria (CBN) clarified on Friday that the 43 items restricted from accessing foreign exchange (FX) through the official window are still banned from the Import and Export Foreign Exchange window (I&E FX window).

Despite the initial impression of FX market liberalisation conveyed by the CBN’s circular released on Wednesday, the use of the term “eligible” in relation to permitted transactions raised concerns among market observers.

Originally compiled by the CBN in June 2015, the list of items ineligible for FX was intended to manage foreign exchange resources and encourage domestic production.

However, analysts reveal that over 70 percent of manufacturers already resort to accessing FX through unofficial channels primarily due to scarcity but also because these items are on the CBN’s list of ineligible items for the official FX window.

Analysts from Proshare said that while applauding the decision to float the naira and put an end to long-standing rent-seeking opportunities, the removal of all controls on FX demand and the implementation of structural reforms are necessary to stimulate foreign direct investment.

Recent foreign trade data for first quarter (Q1) 2023 corroborates this, with imports of five of these items amounting to N543 billion.

Specifically, vegetable fats and oils accounted for N42.36 billion, vegetable products for N344 billion, animal products for N122.47 billion, mackerel meat for N17.05 billion, and crude palm oil for a total of N17.02 billion.

A herd of experts argue that if the country had sufficient supply of these products, importing them would not be a profitable endeavour.

“The exclusion of these 43 items from accessing FX further perpetuates market fragmentation, diminishing the chances of achieving the desired convergence in exchange rates across the two markets,” noted Proshare analysts. (Nigerian Tribune)

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