Cbn forex restrictions

CBN Forex Restrictions: Relevance, Implications.

The June 23 circular of the Central Bank of Nigeria (CBN) restricting 41 items from access to foreign exchange through the CBN or commercial banks have generated heated comments from stakeholders in recent times. In this Special Report, first of five parts, Andrew Airahuobhor, Bamidele Ogunwusi, Sola Alabadan, Oyeniran Apata, Ikechi Nzeako, Nkasiobi Uluikpe examines the policy in more detail.

Exclusion of 41 items from forex.

As part of efforts to reduce the pressure on the Naira while preserving the nation’s external reserves, on June 23, the Central Bank of Nigeria (CBN) issued circular excluding importers of 41 selected goods and services from accessing foreign exchange at the Nigerian foreign exchange markets.

According to the new directive from the apex bank, certain categories of items which had already been classified as ‘not valid for forex’ cannot be funded at the interbank from proceeds of exports and Bureau de change sources. The CBN said authorised dealers are enjoined to ensure that these items are funded from sources outside all the segments of the Nigerian foreign exchange markets.

In specific terms, the items affected by the CBN’s policy include rice, cement, margarine, palm kernel/palm oil products, vegetable 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 sheets, galvanised sheets, roofing sheets, wheelbarrows, head pans, metal boxes and containers.

The list also include enamelware, 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 panel and wooden doors.

Other items affected are toothpicks, glass and glassware, kitchen utensils, tableware, tiles-vitrified and ceramic, textiles, woven fabrics, clothes, plastic and rubber products, polypropylene granules, cellophane wrappers, soap and cosmetics, tomatoes/tomato pastes, euro bond/foreign currency bond/share purchases.

The circular signed by Director, Banking Supervision, Olakanmi Gbadamosi reads in part: “In the continuing efforts to sustain the stability of the forex market and ensure efficient utilisation of forex and the derivation of optimum benefits from goods and services imported into the country, it has become imperative to exclude importers of some goods and services from accessing foreign exchange at the Nigerian forex markets in order to encourage local production of these items.

“The implementation of the policy will help conserve foreign reserves as well as facilitate the resuscitation of domestic industries and improve employment generation.

“For the avoidance of doubt, please note that the importation of these items are not banned, thus importers desirous of importing these items shall do so using their funds without any recourse to the Nigerian foreign exchange market.”

The implication of this CBN policy is that all importers who want to continue bringing in these goods or services into the country will have to source their foreign exchange from private sources.

CBN Defends New Policy On Forex.

As may be expected, the new policy excluding the importers of those 41 items from foreign exchange market has been generating reactions from different quarters. This has also prompted the CBN to clarify its decision less than 24 hours after the circular was issued.

The Governor of Central Bank, Godwin Emefiele, defended the decision of the apex bank to tighten foreign exchange controls by excluding 41 items from the interbank forex market.

Emefiele said the country spends an estimated N1.3 trillion on items that could be manufactured locally, adding that Nigerians need to have a soul-searching conversation on the impact the import regime has on the economy in the areas of industrialisation and job creation.

He explained that it was necessary to shed more light on the rationale behind the policy, “in view of the announcement we made yesterday to exclude more items from accessing foreign exchange at the interbank market”.

According to him, “Sometimes, policy changes are forced on policymakers as a result of exogenous shocks beyond their control. While most people do not like to be forced to do something, one of the hallmarks of effective policymaking is to be nimble and responsive when such situations arise.

“In the case of yesterday’s announcement, I am happy to inform and underscore that this policy change is in line with my long-held belief that Nigeria cannot attain its true potential by simply importing everything.

“At some point, we have to all decide what we really want for our country, and I believe that the time is now right for that deep and honest conversation.”

In retrospect, he referred to his maiden address as governor of the CBN, saying he had argued that central banks in developing countries like Nigeria could not sit idly by and concentrate only on price and monetary stability.

“I argued that additional measures would be required towards identifying productive sectors of the economy and channelling credit towards these sectors, while imposing proper monitoring and performance measures in order to ensure that the goals of increased employment and poverty reduction are attained.

“I also noted that despite Nigeria’s relatively impressive GDP growth rates over the past seven years, there seem to be an absence of a corresponding reduction in unemployment or poverty.

“My personal as well as the Bank’s institutional analyses of the situation compelled us to believe that we needed to aggressively begin the process of feeding ourselves by ourselves and producing much of what we need in this country.

“And in order to begin this process, the CBN took measures to increase credit allocations to pivotal productive sectors of the economy with a view to stimulating increased output in these sectors, creating jobs on a mass scale and significantly reducing our import bills,” he explained.

The CBN boss maintained that the huge amounts of money that Nigeria spends on importing things that could be produced locally have become a significant drag on our foreign exchange reserves.

“Most of you are aware of the often-quoted number of N1.3 trillion, which is what we spend on the average importing rice, fish, sugar and wheat every year.

“Each time I ponder these issues; many vexing questions trouble my mind. Let me take the case of rice for illustration. Why should we keep importing rice into Nigeria when vast amounts of paddy rice of comparable quality produced by poor hardworking local farmers across the rice belts of Nigeria are being wasted and ignored?

“What will it take for these importers to stop the importation and instead go into processing these locally produced rice? Why are these importers not utilising the vast expanses of arable land for rice cultivation instead of taking the easy route of importing rice?

“Do we, as a people, realise how many jobs we are creating for other countries by ignoring local production and simply concentrating on imports?

“How can we keep complaining about the depreciation of the naira when all we do as a people is to import everything from ordinary Geisha (canned fish) and toothpicks, to even eggs?” he asked.

He stressed that these were some of the fundamental reasons behind the central bank’s recent announcement, stressing: “Let me emphasise that the CBN does not have the power to out rightly ban the importation of the items we listed in our circular yesterday.

“Of course, anyone listening to me now would know what I could have done if I had that power. But what we have done is to simply say that the Central Bank of Nigeria cannot continue to support the imports of these items using Nigeria’s hard-earned foreign exchange.

“Importers who may want to continue bringing in these goods or services into the country will have to source their foreign exchange from private sources.

“Let me reiterate that the Central Bank of Nigeria will continue to be vigilant around this policy and will keep reviewing the list of these items as we become comfortable that items can be produced locally if we apply ourselves sufficiently enough.

“I believe that the current situation we find ourselves affords us a unique opportunity to embrace self-sufficiency in Nigeria, reduce our appetite for everything and anything foreign, conserve the country’s scarce foreign exchange, and create jobs here at home for our people.

“With the full complement of the top management of the Bank, I assure you that we will continue to look out for areas in which the Bank can play a catalytic financial role to helping us achieve these goals in the near future.”

Trafficking Of Foreign Currencies Across Borders.

In what appears to be an attempt to derail the policy, the CBN has alerted Nigerians that those offended by its recent policy of restricting foreign currency to importers of 41 items have resorted to exporting hard currency across the nation’s borders with neigbhouring countries. The CBN said large quantum of cash is now being transported through the borders following its foreign exchange denial to importers of restricted products.

However, the apex bank said that it was collaborating with relevant agencies to ensure that the culprits are apprehended.

“The apex bank has noted the unwholesome practice of movements of huge foreign currency cash across Nigerian borders by individuals and corporate bodies without compliance to extant law of declaration to the appropriate authorities. The bank is already collaborating with other relevant agencies of government to ensure compliance to the provisions of the law” the CBN stated.

The CBN also reminded the Bureau de Change operators that they are not allowed to sell more than $5000.00 to any individual customers for Business Travel/Personal Travel Allowance, monthly mortgage payment, School fees abroad, credit card payment, Utility bills, Life insurance premium payment.

“The bank, however, stated that the BDCs are only authorised to deal in foreign currency cash and to sell not more than US$5000.00 to an individual customer and strictly for the following transactions: (i)Business Travel/Personal Travel Allowance; (ii) Monthly mortgage payment; (iii) School fees abroad; (iv) Credit card payment; (v) Utility bills vi) Life insurance premium payment” it noted, insisting that the BDCs are not authorised to fund import transactions in any form whatsoever.

“For the avoidance of doubt, the Central of Nigeria has directed that BDCs are not authorised to fund import transactions in any form whatsoever, either by cash or wire transfer. Accordingly, authorized dealers are hereby barred from effecting wire transfers from the account of their BDCs’ customers henceforth,” the CBN said.

Mixed Reactions Trail Exclusion Of Items From Forex.

In spite of the clarifications by the CBN, mixed reactions have trailed the central bank’s decision to tighten forex controls, with some people applauding the CBN for taking the bold step while others are calling on the apex bank to reconsider its action.

Argument In Support Of CBN Policy.

While some people have faulted the CBN policy excluding the 41 items from forex and called for a massive devaluation of the naira instead of foreign exchange restrictions on certain items such as rice and toothpicks by the CBN, President of Dangote Group, Aliko Dangote, has thrown his weight behind the CBN, describing the ban on 41 items from forex market as “excellent and one of the best decisions taken so far by the CBN Governor, Mr. Godwin Emefiele.”

The foremost businessman described the CBN’s intervention as appropriate for the Nigerian economy saying, “We cannot be importing poverty and exporting jobs.”

Dangote believes that this should be seen as a clarion call for all hands to be on deck in the development of the nation’s economy disclosing that the foreign exchange restrictions on the 41 items also affected the Dangote Group, especially the Dangote Rice. He, however, believes that the measure would encourage his firm “to look inward and massively produce locally to create jobs for our growing young population.”

He pointed out that without such ban by the administration of former President Olusegun Obasanjo, he wouldn’t have got the opportunity to grow his cement business as it is today such that he is now exporting cement when only 10 years ago Nigeria was importing cement massively.

“When Obasanjo introduced the policy, he was massively criticized by multinationals and the same foreign media. But today, we are self-sufficient in cement production,” he stated.

Dangote maintained that those criticising Emefiele for the decision on foreign exchange restrictions do not have the interest of Nigerians at heart.

He therefore called on people in the South-south region of the country to focus on the development of palm plantations instead of importing palm oil. In the same vein, he enjoined the people of Nigeria to see this as an opportunity to invest in fish farming across Nigeria from the North to the Atlantic Ocean, rather than importing fish, saying Nigeria can borrow a leaf from Senegal. “Although fish is a major staple food in Senegal, the country does not import fish….. why should we be importing fish in Nigeria with all our God given ocean resources,” he asked.

He lauded Emefiele for his bold and courageous decision to place certain items that could be produced locally on forex restrictions.

CBN considers review of restrictions on forex market.

By Yinka Kolawole, with agency report.

T he Central Bank of Nigeria, CBN, Governor, Mr. Godwin Emefiele, yesterday in London, said the apex bank would consider relaxing restrictions on foreign exchange transactions in the country if there was a drop in demand for dollars.

Speaking at a conference in London, Emefiele said the restrictions put in place in June to conserve foreign exchange reserves and support the Naira were working.

He said: “CBN had little choice in imposing the curbs in order to preserve foreign reserves.

“Once we have achieved a result, we can allow ourselves to look at a freer market. I think it is working and you should be patient with us. Demand for foreign exchange has dropped.”

The restrictions have reduced liquidity in the market, prompting JPMorgan Chase & Co. to remove the nation’s bonds from its emerging market bond indexes last month.

Recall that CBN had, on June 23, issued a circular excluding importers of 41 goods and services from accessing foreign currencies at the Nigerian foreign exchange markets, after the Naira plunged to a record low in February, following a drop in oil revenue.

The implication of the policy is that all importers, who want to continue bringing in these goods or services into the country, have to source their foreign exchange from private sources.

CBN said the move was to help reduce pressure on the local currency, while preserving the nation’s external reserves.

It said the items cannot be funded at the interbank from proceeds of exports and Bureau de change sources.

Femi Ajasa.

Customs impound NFF’s consignment.

Investors waiting for Buhari’s economic policy—British expert.

Disclaimer.

Text Size Small Medium Large.

Vanguard News.

A Nigerian newspaper and Online version of the Vanguard, a daily publication in Nigeria covering Nigeria news, Niger delta, general national news, politics, business, energy, sports, entertainment, fashion, lifestyle human interest stories, etc.

CBN explains forex restrictions.

Foreign currency restrictions will be lifted only when reserves have been built up to an appreciable level, the Central Bank of Nigeria (CBN) has said.

Addressing journalists in Abuja at the weekend on the recent decision by Deposit Money Banks (DMBs) to limit the use of their debit cards overseas, the CBN’s Director, Monetary Policy Department, Mr. Moses Tule, said the restrictions will be lifted “as soon as we build up reserves; when you see us building reserves to $50 billion, $60 billion, $70 billion, $200 billion or more”.

Tule added: “The moment we begin to build reserves, we expect that just as this restrictions were not there most of the restrictions will be lifted, but for now every hand needs to be on deck. We need to earn foreign exchange. As a country you can improve your business processes in order to export and earn foreign exchange and that is what the country is calling on patriotic Nigerian businessmen to do.”

There have been criticism of the restrictions and banks’ decision to limit the use of debit cards overseas.

Explaining the build-up to the debit card restrictions by the DMBs, Tule said: “The limitation on the use of debit or credit cards outside the country was not a limitation that was placed by the CBN. They were restrictions that Deposit Money Banks (DMBs) placed because they have to settle whatever transactions you make with your debit cards with their corresponding banks in foreign currency and if the banks do not have the foreign currency to do that then you create a liability on them which will crystallise on their balance sheets.”

The CBN, he said, sympathises with Nigerians who are unable to use their debit cards overseas, but the CBN, Tule said, cannot stop it. His words: “At this point, we are in in this country, the obvious answer is that the CBN cannot stop what the banks are doing now and the reason is very obvious. Our priorities as a nation for the allocation or use of foreign exchange is 1) for the settlement of matured LCs (letters of Credit) that have been opened for importation; 2) for the importation of petroleum products until such a time either when we have our refineries fully operational and we are not in a position to import fuel again to ensure that the wheels of economic development continue turning and running and 3) for the importation of raw materials.”

By the time the CBN meets these conditions “given the level of current flow into the reserves, by the time we meet these three priority areas, you will discover that people who are using their debit cards overseas for shopping can never be on the priority list. We would then go back to the point where the foreign exchange, which is a stock dries up that is the position we are in today.”

The CBN director added: “Whatever decisions banks take with respect to allowing their customers use debit cards overseas, those are strictly business decisions. They are looking at their balance sheets, they are looking at their capacity to settle with their corresponding banks the obligations that will crystallize on their balance sheets, rather than open themselves to the people who are out their shopping in foreign currencies, using their debit cards for one thing or another.”

The CBN official admitted that they understand that not all the demands will be for shopping, but “we have seen that the reserves are not there and what we have; we have to use essentially for the purposes that will keep the wheels of the economy running”. “We have to produce for export we can’t continue to depend only on the export of crude oil,” he said.

Tule noted that “the banks have not said customers do not have access to their dollar accounts; what they are saying is that if you deposited cash, you can ask for cash; if the deposits in your account were by way of transfer and you want to carry out a transaction you can only transfer; that is what they are saying.”

The CBN, he said, frowns at the situation where “you benefited from cheap foreign exchange, bought imported raw materials by using the official channels and you brought in your proceeds, now you want to go and draw cash so that you can sell them in the parallel market, we will not allow you because first you generated the proceeds by accessing the official window, which was more cheaper so we wouldn’t allow you”. “These are some of the reasons behind our saying that we placed those restrictions on even people who had dollar export domiciliary accounts background but they can have access to these accounts if they want to import raw materials and that is what we have stuck to.”

Shedding more light on the reason for the forex restrictions, Tule said that “the currency of use in this country is the naira, not the dollar; you cannot expect carrying out dollar transactions over the counter in an economy whose currency is not dollar-denominated we must learn to respect our systems and laws that govern our system.”

The law, he said, clearly states that “your deposits are in naira; if you have a domiciliary account the proceeds, if earned outside the country, you can receive foreign currency deposits into it or if you have earned foreign currency the foreign currency can be deposited in that account. I don’t see you carrying out a transaction and earning foreign currency within Nigeria; you will earn naira. If you had a business that earned foreign currency it will come into your domiciliary account by way of transfer; it is not going to come into your account by way of cash. If you have got cash deposit in your domiciliary account, there are only two ways about it, a) either you’ve patronised the black market or you’re doing some short changing and that’s against the law. The CBN would not like to sit and watch our people using the legitimate channels of the financial system to promote illegality.”

Asked if the CBN will stop funding bureau de change (BDCs) and if it is considering devaluing the naira, Tule said: “From the policy perspective, very hard choices will have to be made and we will make them for the sake of the country and that is the bottom line of that budget speech delivered by President Muhammadu Buhari, the decisions are not to harm or hurt anybody, the decisions would have to be made but it would not be to the detriment of the generality of Nigerians so we must ensure that we promote the welfare of the average Nigerian.”

Whatever the nature of the hard decisions that policy makers will take in 2016, the CBN, Tule said would not shut down BDCs because “when you make policy decisions that involve the public you must protect the employment those agencies are generating, whether you like it or not the BDCs the way they’re currently run one way or another generates some level of employment we don’t want to take decisions that will increase the unemployment situation in the country.”

“It is not as if we are oblivious of some of the things they’re doing we have placed a whole regime of sanctions on erring BDCs in the past, we will continue to fine tune the regulatory mechanism around BDCs, but the button line is that we shouldn’t take decisions that will worsen the situation for policy decisions, you must always be careful when you take them even if you want to take such decisions you must be careful when to take it you must weigh the fundamentals and all the issues round you so we’re looking at the entire regime of BDC operations, the policy regime around it and the regulatory framework; we are fine tuning it and will continue to fine tune it but I definitely assure that we definitely are going to have better BDCs we are beginning to see the example of Travelex that is the way it will go,” Tule said.

RELATED LINKS.

News Update.

Public Poll.

Sponsored Post.

If you are tired and frustrated about having a bald hair that makes you look older, have a low self esteem and unattract.

CBN Forex Restrictions: Relevance, Implications.

The June 23 circular of the Central Bank of Nigeria (CBN) restricting 41 items from access to foreign exchange through the CBN or commercial banks have generated heated comments from stakeholders in recent times. In this Special Report, first of five parts, Andrew Airahuobhor, Bamidele Ogunwusi, Sola Alabadan, Oyeniran Apata, Ikechi Nzeako, Nkasiobi Uluikpe examines the policy in more detail.

Exclusion of 41 items from forex.

As part of efforts to reduce the pressure on the Naira while preserving the nation’s external reserves, on June 23, the Central Bank of Nigeria (CBN) issued circular excluding importers of 41 selected goods and services from accessing foreign exchange at the Nigerian foreign exchange markets.

According to the new directive from the apex bank, certain categories of items which had already been classified as ‘not valid for forex’ cannot be funded at the interbank from proceeds of exports and Bureau de change sources. The CBN said authorised dealers are enjoined to ensure that these items are funded from sources outside all the segments of the Nigerian foreign exchange markets.

In specific terms, the items affected by the CBN’s policy include rice, cement, margarine, palm kernel/palm oil products, vegetable 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 sheets, galvanised sheets, roofing sheets, wheelbarrows, head pans, metal boxes and containers.

The list also include enamelware, 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 panel and wooden doors.

Other items affected are toothpicks, glass and glassware, kitchen utensils, tableware, tiles-vitrified and ceramic, textiles, woven fabrics, clothes, plastic and rubber products, polypropylene granules, cellophane wrappers, soap and cosmetics, tomatoes/tomato pastes, euro bond/foreign currency bond/share purchases.

The circular signed by Director, Banking Supervision, Olakanmi Gbadamosi reads in part: “In the continuing efforts to sustain the stability of the forex market and ensure efficient utilisation of forex and the derivation of optimum benefits from goods and services imported into the country, it has become imperative to exclude importers of some goods and services from accessing foreign exchange at the Nigerian forex markets in order to encourage local production of these items.

“The implementation of the policy will help conserve foreign reserves as well as facilitate the resuscitation of domestic industries and improve employment generation.

“For the avoidance of doubt, please note that the importation of these items are not banned, thus importers desirous of importing these items shall do so using their funds without any recourse to the Nigerian foreign exchange market.”

The implication of this CBN policy is that all importers who want to continue bringing in these goods or services into the country will have to source their foreign exchange from private sources.

CBN Defends New Policy On Forex.

As may be expected, the new policy excluding the importers of those 41 items from foreign exchange market has been generating reactions from different quarters. This has also prompted the CBN to clarify its decision less than 24 hours after the circular was issued.

The Governor of Central Bank, Godwin Emefiele, defended the decision of the apex bank to tighten foreign exchange controls by excluding 41 items from the interbank forex market.

Emefiele said the country spends an estimated N1.3 trillion on items that could be manufactured locally, adding that Nigerians need to have a soul-searching conversation on the impact the import regime has on the economy in the areas of industrialisation and job creation.

He explained that it was necessary to shed more light on the rationale behind the policy, “in view of the announcement we made yesterday to exclude more items from accessing foreign exchange at the interbank market”.

According to him, “Sometimes, policy changes are forced on policymakers as a result of exogenous shocks beyond their control. While most people do not like to be forced to do something, one of the hallmarks of effective policymaking is to be nimble and responsive when such situations arise.

“In the case of yesterday’s announcement, I am happy to inform and underscore that this policy change is in line with my long-held belief that Nigeria cannot attain its true potential by simply importing everything.

“At some point, we have to all decide what we really want for our country, and I believe that the time is now right for that deep and honest conversation.”

In retrospect, he referred to his maiden address as governor of the CBN, saying he had argued that central banks in developing countries like Nigeria could not sit idly by and concentrate only on price and monetary stability.

“I argued that additional measures would be required towards identifying productive sectors of the economy and channelling credit towards these sectors, while imposing proper monitoring and performance measures in order to ensure that the goals of increased employment and poverty reduction are attained.

“I also noted that despite Nigeria’s relatively impressive GDP growth rates over the past seven years, there seem to be an absence of a corresponding reduction in unemployment or poverty.

“My personal as well as the Bank’s institutional analyses of the situation compelled us to believe that we needed to aggressively begin the process of feeding ourselves by ourselves and producing much of what we need in this country.

“And in order to begin this process, the CBN took measures to increase credit allocations to pivotal productive sectors of the economy with a view to stimulating increased output in these sectors, creating jobs on a mass scale and significantly reducing our import bills,” he explained.

The CBN boss maintained that the huge amounts of money that Nigeria spends on importing things that could be produced locally have become a significant drag on our foreign exchange reserves.

“Most of you are aware of the often-quoted number of N1.3 trillion, which is what we spend on the average importing rice, fish, sugar and wheat every year.

“Each time I ponder these issues; many vexing questions trouble my mind. Let me take the case of rice for illustration. Why should we keep importing rice into Nigeria when vast amounts of paddy rice of comparable quality produced by poor hardworking local farmers across the rice belts of Nigeria are being wasted and ignored?

“What will it take for these importers to stop the importation and instead go into processing these locally produced rice? Why are these importers not utilising the vast expanses of arable land for rice cultivation instead of taking the easy route of importing rice?

“Do we, as a people, realise how many jobs we are creating for other countries by ignoring local production and simply concentrating on imports?

“How can we keep complaining about the depreciation of the naira when all we do as a people is to import everything from ordinary Geisha (canned fish) and toothpicks, to even eggs?” he asked.

He stressed that these were some of the fundamental reasons behind the central bank’s recent announcement, stressing: “Let me emphasise that the CBN does not have the power to out rightly ban the importation of the items we listed in our circular yesterday.

“Of course, anyone listening to me now would know what I could have done if I had that power. But what we have done is to simply say that the Central Bank of Nigeria cannot continue to support the imports of these items using Nigeria’s hard-earned foreign exchange.

“Importers who may want to continue bringing in these goods or services into the country will have to source their foreign exchange from private sources.

“Let me reiterate that the Central Bank of Nigeria will continue to be vigilant around this policy and will keep reviewing the list of these items as we become comfortable that items can be produced locally if we apply ourselves sufficiently enough.

“I believe that the current situation we find ourselves affords us a unique opportunity to embrace self-sufficiency in Nigeria, reduce our appetite for everything and anything foreign, conserve the country’s scarce foreign exchange, and create jobs here at home for our people.

“With the full complement of the top management of the Bank, I assure you that we will continue to look out for areas in which the Bank can play a catalytic financial role to helping us achieve these goals in the near future.”

Trafficking Of Foreign Currencies Across Borders.

In what appears to be an attempt to derail the policy, the CBN has alerted Nigerians that those offended by its recent policy of restricting foreign currency to importers of 41 items have resorted to exporting hard currency across the nation’s borders with neigbhouring countries. The CBN said large quantum of cash is now being transported through the borders following its foreign exchange denial to importers of restricted products.

However, the apex bank said that it was collaborating with relevant agencies to ensure that the culprits are apprehended.

“The apex bank has noted the unwholesome practice of movements of huge foreign currency cash across Nigerian borders by individuals and corporate bodies without compliance to extant law of declaration to the appropriate authorities. The bank is already collaborating with other relevant agencies of government to ensure compliance to the provisions of the law” the CBN stated.

The CBN also reminded the Bureau de Change operators that they are not allowed to sell more than $5000.00 to any individual customers for Business Travel/Personal Travel Allowance, monthly mortgage payment, School fees abroad, credit card payment, Utility bills, Life insurance premium payment.

“The bank, however, stated that the BDCs are only authorised to deal in foreign currency cash and to sell not more than US$5000.00 to an individual customer and strictly for the following transactions: (i)Business Travel/Personal Travel Allowance; (ii) Monthly mortgage payment; (iii) School fees abroad; (iv) Credit card payment; (v) Utility bills vi) Life insurance premium payment” it noted, insisting that the BDCs are not authorised to fund import transactions in any form whatsoever.

“For the avoidance of doubt, the Central of Nigeria has directed that BDCs are not authorised to fund import transactions in any form whatsoever, either by cash or wire transfer. Accordingly, authorized dealers are hereby barred from effecting wire transfers from the account of their BDCs’ customers henceforth,” the CBN said.

Mixed Reactions Trail Exclusion Of Items From Forex.

In spite of the clarifications by the CBN, mixed reactions have trailed the central bank’s decision to tighten forex controls, with some people applauding the CBN for taking the bold step while others are calling on the apex bank to reconsider its action.

Argument In Support Of CBN Policy.

While some people have faulted the CBN policy excluding the 41 items from forex and called for a massive devaluation of the naira instead of foreign exchange restrictions on certain items such as rice and toothpicks by the CBN, President of Dangote Group, Aliko Dangote, has thrown his weight behind the CBN, describing the ban on 41 items from forex market as “excellent and one of the best decisions taken so far by the CBN Governor, Mr. Godwin Emefiele.”

The foremost businessman described the CBN’s intervention as appropriate for the Nigerian economy saying, “We cannot be importing poverty and exporting jobs.”

Dangote believes that this should be seen as a clarion call for all hands to be on deck in the development of the nation’s economy disclosing that the foreign exchange restrictions on the 41 items also affected the Dangote Group, especially the Dangote Rice. He, however, believes that the measure would encourage his firm “to look inward and massively produce locally to create jobs for our growing young population.”

He pointed out that without such ban by the administration of former President Olusegun Obasanjo, he wouldn’t have got the opportunity to grow his cement business as it is today such that he is now exporting cement when only 10 years ago Nigeria was importing cement massively.

“When Obasanjo introduced the policy, he was massively criticized by multinationals and the same foreign media. But today, we are self-sufficient in cement production,” he stated.

Dangote maintained that those criticising Emefiele for the decision on foreign exchange restrictions do not have the interest of Nigerians at heart.

He therefore called on people in the South-south region of the country to focus on the development of palm plantations instead of importing palm oil. In the same vein, he enjoined the people of Nigeria to see this as an opportunity to invest in fish farming across Nigeria from the North to the Atlantic Ocean, rather than importing fish, saying Nigeria can borrow a leaf from Senegal. “Although fish is a major staple food in Senegal, the country does not import fish….. why should we be importing fish in Nigeria with all our God given ocean resources,” he asked.

He lauded Emefiele for his bold and courageous decision to place certain items that could be produced locally on forex restrictions.

About magna.

What you can read next.

Value of 97% of Nigeria’s landed property unknown – Don.

FIRS Made N1.8trn Revenue In 6 Months – Ogungbesan.

Bafana Bafana coach sacked.

Market Capitalization.

Newsletter Subscription.

Magnartis Finance & Investment Ltd (“Magnartis”) is a Dealing Member of The Nigerian Stock Exchange with expertise in Stockbroking and Trade Execution Services.

Research.

Contact Info.

16, Boyle Street, Onikan, Lagos, Nigeria.

GET SOCIAL.

© 2014 Magnartis Finance & Investment Limited. All Right Reserved.