Forex crisis: Expert seeks CBN review of ban on 41 items

Godwin Emefiele, CBN governor

A financial expert on Monday called on the Central Bank of Nigeria (CBN) to review the foreign exchange restriction placed on 41 items imported into the country.

Dr Uche Uwaleke, the Head of Banking and Finance Department, Nasarawa State University, Keffi, made the suggestion in an interview in Lagos.

He said that the review had become important, especially those items critical to the economic development of the country.

The CBN had in July, 2015, restricted about 41 items, including vegetable oil, poultry products, cosmetics and plastic and rubber products, among others, from access to foreign exchange from its official window.

The apex bank said that the country has the capacity to produce those items locally.

Uwaleke stated that the apex bank should, however, revisit the list of 41 items with a view to exempting a few, especially pharmaceutical items, considered critical to the health sector.

Uwaleke, who was assessing the apex bank’s management of the forex crisis, said that the restrictions on a number of items should remain until the country’s export base was sufficiently diversified.

He also scored the apex bank a pass mark on the management of the crisis, especially since the naira was floated in the second quarter of 2016.

“I would score the CBN a pass mark. It would be suicidal for the value of the naira to be left completely to market forces on account of the disequilibrium in favour of the demand side.

“Until the country’s export base is sufficiently diversified and there are sustainable multiple streams of forex, the restrictions on a number of items from accessing forex from the CBN should remain,” Uwaleke said.

He stated that the introduction of the future segment had gone a long way in reducing pressure on the spot market.

According to him, the CBN should improve on market transparency due to allegations of multiple exchange rates in use.

“Much as it makes sense to adopt a concessional window for critical manufacturing inputs and fuel imports if the pump price of fuel must remain at present level, it is unacceptable to use preferential rates for top government officials,” he said.

Uwaleke said that the CBN should not contemplate the idea of using force to extinguish the parallel market.

He said that the strategy did not work in Venezuela and Egypt , noting that it would be a waste of resources if attempted in Nigeria.