CBN 41 items list were restricted from foreign exchange following the interbank market. Importers of items on the list were to seek approval from CBN, stating their source of funds. In our article for CBN 41 items not valid for forex, we gave a point-by-point guide on how to import listed commodities. The CBN at that time gave the following reasons for restricting certain items from buying foreign currency officially. Never mind that we say CBN 41, the list is more than 41 items as the then CBN added more commodities. In this article, we will update you with reasons why CBN lifted the forex restriction on items previously banned for forex.
CBN 41 ITEMS LIST FREE FOR FOREX
- Palm kernel/palm oil products/vegetables oils
- Meat and processed meat products
- Vegetables and processed
- vegetable products
- Poultry – chicken, eggs, turkey
- Private airplanes/jets
- Indian incense
- Tinned fish in sauce (geisha)/sardines
- Cold-rolled steel sheets
- Galvanized steel sheets
- Roofing sheets
- Head pans
- Metal boxes and containers
- Steel drums
- Steel pipes
- Wire rods (deformed and not 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
- Glass and Glassware
- Kitchen utensils
- Tiles – vitrified and ceramic
- Woven fabrics and Clothes
- Plastic and rubber products, polypropylene granules, cellophane wrappers
- Soap and cosmetics
- Tomatoes/tomato paste
- Eurobond/foreign currency bond/ share purchases
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WHY DID THE CBN RESTRICT 41 ITEMS FROM FOREX?
The following are reasons from CBN for restricting some goods from access to forex.
- Continuing effort to sustain the stability of the foreign exchange market.
- To ensure the efficient utilization of foreign exchange and the derivation of optimum benefit from goods and services imported into the country.
- Equally, to encourage local production of these items.
- The implementation of the policy will help conserve foreign reserves.
- Additionally, to facilitate the resuscitation of domestic industries and improve employment generation.”
CBN 41 ITEMS LIST FREE TO ACCESS FOREX
The current leadership of the central bank of Nigeria on Thursday 12 September 2023 announced the suspension of forex restriction on the importation of the goods above. Furthermore, the Central Bank of also released an explanation to support its decision of lifting foreign exchange restrictions on the 41-plus items excluded from accessing foreign exchange from the official market. Some of the reasons from CBN for lifting the restriction are in the next paragraphs.
WHY CBN LIFTED RESTRICTION ON ITEMS BANNED FOR FX
- Firstly, the restriction created room for the importers to source their foreign exchange from the black market, which weakened the parallel-market exchange rate and pushed up prices.
- Hence, the CBN wants to ensure price stability, thus, is seeking to boost liquidity in the Nigerian Foreign Exchange Market. As liquidity improves, we expect the distortions to moderate.
- The CBN wants to promote orderliness and professional conduct by all Nigerian Foreign Exchange Market participants to ensure market forces determine exchange rates on a Willing Buyer – Willing Seller principle.
- Again, CBN wants a unified market for FOREX with flexible and transparent pricing.
- The CBN explained that the implication of the policy is that Monetary Policy tools would become more effective with the attainment of a unified, well-functioning market for FX, where pricing is on a willing-buyer and willing-seller system.
- CBN said with this lifting of forex restrictions, the CBN’s core functions and mandates become realizable.
- The CBN explained, “The willing-buyer and willing-seller system allows the exchange rate to adjust to clear the market and ensure that there is always supply. In recent months, the widening premium between the official rate and the parallel market indicates that the rate has not been setting a clearing price.
- Importers of these products rely on the parallel market to source FX for importing these goods. This puts additional demand pressures on the parallel market, thereby widening the gap with the official rate and permanently segmenting the market. Removing these restrictions eliminates the need for importers of these products to go to the parallel market, reducing the pressure on the naira.
- The hitherto FX restrictions had implications on inflation, causing the prices of affected goods to increase.
In 2015, the central bank of Nigeria, headed by Godwin Emefiele restricted the 41 items list from access to foreign currency via the official window. The CBN added more items subsequently from the official forex window. The reason at that time was to reduce foreign exchange demand for products that Nigerians can produce locally. Finally, the CBN at that time said the goal is to improve employment generation and conserve foreign reserves.
However, the current CBN managers think differently. In their own wisdom, the restriction of selected items from forex is counter-productive to local economy. They believe that the move stressed the Naira more than projected. While importers of those commodities heave a sigh of relieve, not all analysts agree with the current CBN on the 41 items list.
The Senior Partner and Economist at SPM Professionals, Paul Alaje, argued that the decision is not a careful thinking. “I don’t know who advised us on these 43 items. It is important we rethink the decision before it is too late. Our issues are around insufficient FX.” “How is demand stimulation policy going to bring us out of the FX crisis? This may further weaken the naira,” Alaje said as he reacts to the decision of the central bank.
We do not take part in questioning government decisions, but merely report to keep our readers up-to-date. Feel free to contact us for hassle free import and export. Thank you for reading this post.
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