The removal of the ban on 43 items that were initially restricted from accessing foreign exchange markets by the Central Bank of Nigeria (CBN) has raised concerns among local manufacturers and farmers in the country. They fear that this move may lead to many of them going out of business. Additionally, despite the CBN’s policy, the value of the naira continues to decline.
The CBN stated that the purpose of lifting the ban on these items was to encourage participation in the Investors and Exporters (I&E) window to attract foreign exchange into the economy. The original ban was implemented to manage scarce forex resources and protect local manufacturers by making the import of these items expensive, thus preventing them from competing with locally made products.
However, the decision to unban these items has not resulted in increased availability of foreign exchange. Experts suggest that structural issues and inefficiencies in the forex market, along with the allure of the black market’s arbitrage opportunities, have hindered the success of this policy. They argue that the CBN needs to find ways to ensure a consistent inflow of foreign exchange, reducing dependence on the supply side of the market and addressing structural distortions.
Some stakeholders believe that the policy to unban the 43 items aligns with the liberalization of foreign exchange. They argue that companies invested in backward integration for import substitution will not suffer losses due to dumping, as there are still customs import bans on most of the items on the list.
Others, however, criticize the unbanning, suggesting it may increase demand for foreign exchange without adequate supply. There are backlogs of trapped funds, pending payments, and delays in important transactions. Additionally, the removal of fuel subsidies without functioning refineries is affecting households as fuel prices have surged while salaries remain stagnant.
Local oil palm producers are concerned that the policy may push them out of the market. The availability of cheaper imported palm oil may discourage local producers, causing them to lose market share.
Some experts emphasize the need for harmonizing monetary and fiscal policies to ensure a more comprehensive approach to trade regulation. They argue that without sound fiscal policy and cooperation with stakeholders, the unbanning of these items may negatively impact local manufacturers, potentially leading to factory closures and job losses.
In contrast, some stakeholders believe the removal of the ban will help rediscover the nation’s economy and promote interaction with neighboring countries. They argue that while the ban was in place, it did not lead to the expected influx of foreign exchange, and removing it may not significantly affect the economy.
Ultimately, opinions on the unbanning of the 43 items are divided, with some praising it as a positive move while others express concerns about its potential negative consequences.