The Central Bank of Nigeria (CBN) yesterday announced its restriction of access to foreign exchange (FX) for the importation of fertiliser from the official FX window.This is coming exactly 10 days after the CBN Governor, Mr. Godwin Emefiele, hinted of plan to expand the number of items not valid for FX from the official window.
The latest development brings the list of items not eligible for FX to 42.
The central bank disclosed this in a circular titled: "Re: Inclusion of Some Imported Goods and Services on the List of Item 'Not Valid for Foreign Exchange' in the Nigerian Foreign Exchange Market," that was obtained yesterday.
The two-paragraph document dated December 10, 2018, was signed by the Director, Trade and Exchange Department, CBN, Ahmed Umar.
The CBN had in July 2015, restricted 41 items, including vegetable oil, poultry products, toothpicks, cosmetics, plastic and rubber products, among others, from accessing foreign exchange from the interbank foreign exchange market. Importers of the restricted items were asked to source their forex requirements from autonomous sources.
However, in the latest circular, the banking sector regulator explained: "In the continued effort to sustain the achievement recorded from the classification of 41 import items as 'Not Valid for FX' in the Nigerian FX market, authorised dealers and the general public are hereby notified of the inclusion of "fertiliser" on the list effective from Friday, December 7,2018.
"However, CBN will ensure that transactions (Form 'M') on fertiliser for which payments are outstanding are settled at the appropriate settlement dates."
Meanwhile, in a separate letter to all banks dated December 10, 2018, the Director, Financial Policy and Regulation Department, Mr. Kevin Amugo, explained that the decision to restrict forex to the 41 items in 2015, had led to employment generation and inclusive growth in the country.
Furthermore, he said the policy has resulted in "massive investments and the establishment of cottage industries that now engage in the production of the restricted items across the country."
He, however, revealed that, "unfortunately, trade information available to the CBN indicates that the circumvention of the policy as the restricted items are being dumped in the country."
The implication of this, according to Amugo, was that growth and employment benefits that arose from the policy may be eroded if not checked.
"The CBN views this development with trepidation. The Economic Intelligence Unit of the Bank in collaboration with the Economic and Financial Crimes Commission would commence immediate investigation of the accounts of the corporates and entities engaged in this unwholesome act, with a view to visiting severe sanctions on all culprits.
"Such sanctions would among others include blacklisting the corporates and their directors; closure of their bank accounts and restricting them from maintaining any bank account in any bank under the CBN remit.
"Banks that provided their platforms for such economic abuses would also be properly sanctioned.
"Banks are by this notice advised on strict compliance with the Know-Your-Customer and Know-Your-Customer-Business requirements and to be properly guided."
Emefiele had revealed that the initiative aimed at encouraging domestic production had resulted in Nigeria's monthly import bill falling significantly from $665.4 million in January 2015, to $160.4 million as at October 2018, representing a drop by 75.9 per cent and an implied savings of over $21 billion on food imports alone over that period.
According to him, many entrepreneurs are now taking advantage of policies aimed at ramping local production to venture into the domestic production of the restricted items with remarkable successes and great positive impact on employment.
"The dramatic decline in our import bill and the increase in domestic production of these items attest to the efficacy of this policy.
"Most evident were the 97.3 percent cumulative reduction in monthly rice import bills, 99.6 percent in fish, 81.3 percent in milk, 63.7 per cent in sugar, and 60.5 percent in wheat.
"We are glad with the accomplishments recorded so far. Accordingly, this policy is expected to continue with vigour until the underlying imbalances within the Nigerian economy have been fully resolved.
"If we continue to support the growth of small holder farmers, as well as help to revive palm oil refineries, rice mills, cassava and tomato processing factories, you can only imagine the amount of wealth and jobs that will be created in the country.
"These could include new set of small holders farmers that will be engaged in productive activities; new logistics companies that will transport raw materials to factories, and finished goods to the market; new storage centres that will be built to store locally produced goods; additional growth for our banks and financial institutions as they will be able to provide financial services to support these new businesses; and finally, the millions of Nigerians that will be employed in factories to support processing of goods.
"If we turn a blind eye to the opportunities that are being created as a result of our policy on 41 items, we will be spelling doom for our nation. We can no longer afford to depend solely on imports given the size of our population, and the need to create jobs for our people."
The CBN governor had equally stated that the Bank would be collaborating with the EFCC to expose banks, importers or organisations that collude with corrupt individuals to flout the policy.