Restricted 41items: Between CBN and former CBN Gov. Chukwuma Soludo
First of all, the 41 items are: Rice; cement; margarine; 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; wheelbarrows; head pans; metal boxes and containers; enamelware; steel drums; steel pipes; and wire rods (deformed and not deformed).
Others are iron rods and reinforcing bard; wire mesh; steel nails; security and razor wine; wood particle boards and panels; wood fibre boards and panels; plywood boards and panels; wooden doors; 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; and eurobond/foreign currency bond/ share purchases.
Certainly, the CBN did not actually ban the importation of any of the items because it is not within its jurisdiction to do so.
Rather, for reasons concerning the monetary policy in its purview and the trending development interventions among global central bankers, withdrew the use of dwindling forex earnings for financing of items it feels there are local alternatives and capacity.
Otherwise, those who import the items in question will not buy foreign currency from the official window to pay the overseas suppliers. Invariably, they may do so from any other source available to them, for example, the parallel market, also known as the “black market”.
Since recently, there had been persistent argument over the list of 41 items excluded from official forex intervention standing at the centre of continued short-term gains, with slow-paced substitution strategy and medium term pains for long-term benefits that may be rare to come by.
But Nigeria, as well as Nigerians, noted for importing virtually everything, especially for its sake and status symbol, it did not go down well with. Similarly, given infrastructural constraints, lack of capacity to fill the gaps in the immediate and the assessed short to medium term implications, particularly, production and employment, the rationale was placed under serious inquisition.
But the truth is that this policy has generated serious divergence of views from experts that know it all, thus leaving novice confused.
For example, just as current CBN governor clam that the forex restriction is saving rundown of foreign reserves and driving local content development, former Governor of the same bank, Prof. Chukwuma Soludo, faulted the restrictions placed on some items, alleging that decisions have become political than economics and that there are better options than experimenting with the well being of millions of Nigerians.
“We need import substitution but not through a crude form. You cannot unify foreign exchange market with discrimination, except through commercial policy and tariff, because such strategy has repeatedly failed in the country and add more trouble. It is 100 steps backward and 15 forward,” Soludo noted.
While admitting that Nigeria’s current economic travails were a product of last administration’s misdeed, alleged that it was aggravated by ongoing policies, which he described as “two wrong steps.”
“They brought in the Single Treasury Account (TSA) and channeled funds into one account that did not allow spending, and they also fixed the price of foreign exchange,” he said, adding that prohibition of items heightened speculations and round-tripping of forex.
“These are things you do not do,” he said.
Another public finance expert, the Global Chief Economist, Renaissance Capital, Charles Robertson, toed Soludo’s line of reasoning, saying it is debatable whether foreign capital will be available for government to “turbo-charge” the recovery plans.
According to him, “The currency restrictions imposed on investors will likely mean that investors demand a premium to invest in Nigeria again. Zambia or Ghana or Egypt by contrast, which allowed currency flexibility, should find it easier to attract investors”.
