Forex Policy: CBN policy that restricts access to foreign exchange for importation of 41 items is forcing manufacturers to do the best they can to improvise, thereby boosting local manufacturing and conserving national reserves.
About two years ago, the CBN was heavily criticised when the policy to restrict those items from being imported was announced. But the banking sector regulator maintained then that it was basically borne out of the need to conserve scarce forex, and that made firms in the country to look inwards in order to drive to support the federal government’s import-substitution strategy.
The CBN had in June 2015 classified 41 items as “Not Valid for Foreign Exchange”, on the grounds that they could be produced in Nigeria and there was no rationale for depleting the country’s reserves on their importation. Some of the affected items were rice, cement, margarine, palm kernel, palm oil products, vegetable oils, meat and processed meat products, vegetables and process vegetable products, poultry, tomatoes/tomato paste, soap and cosmetics, and clothes.
Others included Indian incense, tinned fish in sauce, cold rolled steel sheets, galvanised steel sheets, roofing sheets, wheelbarrows, head pans, metal boxes/containers, enamelware, steel drums and pipes, wire mesh, steel nails, wood particle boards and panels.
The action was taken at a time the economy was confronted with falling Gross Domestic Product growth rate, rising inflation, persistently high interest rates, falling foreign reserves, and depreciating exchange rate.
In fact, in 2016, which was the first full year of implementation of the policy, rice exports to Nigeria fell by 99 per cent to only 784 metric tonnes. The significant reduction in imports of rice from Thailand saved over US$600 million to Nigeria in 2016 alone.
Furthermore, as part of the gains of the CBN foreign exchange restriction policy, Unilever Nigeria last week inaugurated its new Blue Band Factory in Agbara, Ogun State. The establishment of the factory was fallout of the policy that restricted 41 items from accessing FX from the interbank market.
More and more manufacturing companies in Nigeria will surely follow the example set by Unilever and other local manufacturing companies who desire to make Nigeria a great nation.
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