Last Thursday, central bank of nigeria (CBN) announced. We have lifted restrictions on 43 prohibited items. In 2015, you can no longer access foreign exchange (FX) through official foreign exchange counters.
“Importers of all 43 items previously restricted by the TED/FEM/FPC/GEN/01/010 referenced in the 2015 Circular and its addenda are now permitted to purchase foreign exchange in the Nigerian Foreign Exchange Market. ”In a statement signed by Isa Abdulmoomin, Director of Corporate Communications, CBN, said:
The new decision by the central bank to remove foreign exchange restrictions on these products comes on June 23, 2015, when the central bank made it mandatory for people trading these products to access foreign exchange at licensed foreign exchange counters. This was done approximately eight years after the restrictions were imposed. The purpose of this policy was to relieve pressure on the demand for imported dollars and encourage local production of these items.
Examples of affected items include rice, cement, margarine, palm kernels, palm oil products, vegetable oils, meat and meat products, vegetables and vegetable products, poultry, tomatoes/tomato paste, soaps and cosmetics, and clothing. I can list it.
![Smuggled rice seized by customs officials.](https://media.premiumtimesng.com/wp-content/files/2023/07/fa3f257e-27f9-4536-aeec-edf3828ceb25.jpg)
Other items include commercial airplanes/jet planes, Indian incense, canned fish in sauce, cold-rolled steel sheets, galvanized steel sheets, roof shingles, wheelbarrows, headpans, metal boxes/containers, enamel products, steel Includes drums and pipes, wire mesh, and steel nails. , wood particle board, and panels.
Also security and razor wire, wood chips and fibreboard and panels, wooden doors, furniture, toothpicks, glass/glassware, kitchen utensils, tableware, tiles (vitrified, ceramic), textiles, wooden textiles, plastic/rubberware, Polypropylene was also affected. Granules, cellophane wrapping paper.
Later, in an effort to achieve backward integration policy for major items, the central bank added fertilizer and maize/maize to the list of items.
This policy encouraged importers to source foreign exchange on parallel markets for transactions, resulting in additional pressure and demand for foreign exchange at unauthorized outlets.
If you look at the products that aren’t prohibited, you’ll see that there are about 10 food-related products among the restricted products.
Impact on food security
Over the past decade, the prices of the food items listed above, including rice, maize, and poultry products (eggs, chicken), which are the main staple foods of Nigerians, have increased by more than 100 percent.
![Egg crate, photo by Mary Izuaka](https://media.premiumtimesng.com/wp-content/files/2021/03/5-Crates-of-eggs-Photo-credit_-Mary-Izuaka.jpg)
The upward trend in the prices of these essentials and other products has negatively affected the purchasing power of many citizens, making it difficult for many households in the country to cover their daily meals.
Last year, Premium Times report The average price of poultry feed in Nigeria has increased by at least 168% in the past three years, highlighting the scale of food inflation in Nigeria in recent years.
According to the latest information from the National Bureau of Statistics (NBS), inflation report, Nigeria’s food inflation rate in September rose to 30.64% year-on-year. This figure represents an increase of 7.30 percentage points compared to the rate recorded in September 2022 (23.34 percentage points).
The ramifications of this trend are evident in the state of food availability, accessibility and affordability in the country amidst inflationary pressures and the lingering effects of climate change.
As food prices soar in July, President Bola Tinubu An immediate “state of emergency” was declared regarding food insecurity in the country.
The move is being seen as part of Nigeria’s aggressive drive to increase agricultural productivity and reduce high prices of key staple foods.
The government also noted that this development is in line with its short-, medium- and long-term strategies to address the challenges of food affordability and accessibility in the country.
While the CBN’s decision to lift the ban on 43 items marks a major step towards resolving the country’s currency crisis, experts also expressed mixed feelings about the impact of lifting the ban on the state of food security in the country. ing.
experts speak
Dairy Hills Limited Chief Executive Officer Kelvin Emmanuel described the initiative as a “good development” after the CBN lifted exchange restrictions on 43 items.
He said the restrictions had created an unfair advantage, spurred parallel market demand and created a black market premium that currently stands at 32.5%.
![Kelvin Emanuel, CEO, Dairy Hills](https://media.premiumtimesng.com/wp-content/files/2023/10/WhatsApp-Image-2023-10-22-at-10.33.52_1dc9cad7.jpg)
Emmanuel expressed concern that lifting the ban on 43 items would not impact the government’s touted backward integration drive.
He said there are still customs bans in place, apart from allowing those trading the commodity to access FX through official counters.
“We believe that to truly bring the exchange rate back within the real effective exchange rate (REER) range, the central bank needs to clear all outstanding capital and dividend remittances, Form A and commercial letters of credit,” he said. ” he said. In an interview with PREMIUM TIMES.
He said the CBN is not only involved in securities lending to apex banks in partnership with external asset management companies without parliamentary approval, but also in rebalancing external reserve liabilities related to currency swaps to banks. He explained that he needed to work on it.
Mr Emmanuel said: “Nigeria is key to slowing inflation and adjusting the inflation and interest rate yield curve to achieve sustainable credit. There is an urgent need for backward integration for import substitution.”
Azeez Salau, founder of Community Action for Food Security (CAFS AFRICA), said the CBN’s decision was a “complex move” with both potential benefits and risks.
![Aziz Salau](https://media.premiumtimesng.com/wp-content/files/2023/10/130751846_3744508618903304_9023860620003483879_n-e1697966682262.jpg)
On the other hand, improved access to foreign exchange for importers could increase the supply of these foods on the domestic market, which could in turn help stabilize prices and address short-term food shortages. He said that there is.
However, Salau noted that there are concerns that the move could hamper local food production.
“Nigeria has strived to become self-sufficient in food production, but the easing of the exchange embargo could mean that the agricultural sector will not receive the level of support it needs to thrive,” he said.
Food systems experts said lifting the currency ban could have a negative impact on small-scale farmers and local food producers, who could face increased competition from cheaper imports.
Impact on food security
Speaking on food security, Mr Salau explained that the impact on Nigeria’s food security will depend on how well the CBN’s decisions are managed.
“It is important that we do not undermine local food production efforts. To ensure long-term food security, governments must strike a balance between promoting and supporting domestic agriculture while encouraging imports of what cannot be produced locally. “We need to take a different approach,” he said.
Razak Fatai, head of research and advisory at Vestans, a data-driven intelligence and advisory firm that helps transform Nigeria’s food system, says key agricultural inputs are on the list of 10 food-related items affected by CBN policies. He said that since it was not included, the impact would be significant. There were limits to domestic production costs.
![Razaq Fatai, Research and Advisory Lead at Vestance](https://media.premiumtimesng.com/wp-content/files/2023/10/WhatsApp-Image-2023-10-22-at-10.35.50_1b03fe08-e1697968025195.jpg)
However, he lamented that there is a risk that agricultural input costs will increase if the naira depreciates further through official channels due to increased foreign exchange demand.
Mr Fatai said importers of food products such as rice and edible oil were still dependent on dollars in the parallel market, and price pressures may continue. To truly benefit households, he explained, complementing the CBN policy by lowering import duties on these important food items could pave the way for lower prices.
“Stabilizing the exchange rate by curbing oil theft and promoting local food production is critical to stabilizing domestic food prices,” he added.
Our goal
Fatai said a significant increase in foreign exchange supply is essential to secure dollars for importers of the 43 items, and this largely depends on the government’s ability to increase oil production.
“Unless the government can secure concessional financing from institutions like the World Bank, borrowing is not a viable option due to rising global interest rates,” he said.
Food systems experts said remittance flows will not go through official channels until exchange rates are harmonized, and other sources of exchange funding, such as foreign investment, will not materialize until macroeconomic stability is achieved. .
Mr Salau said the success of the CBN policy largely depends on effective monitoring and management to ensure that Nigeria’s progress towards food self-sufficiency is not hampered.
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