Yemi Cardoso, the governor of the Central Bank of Nigeria (CBN), addressed misconceptions surrounding the 43 items previously restricted from foreign exchange (FX) access at the official market. Speaking at the 58th Annual Bankers’ Dinner in Lagos, Cardoso clarified that the items were not outrightly banned but were subject to restrictions in accessing FX through official channels.
He emphasized that the trade policy governing the importation and sale of these items falls under the jurisdiction of fiscal authorities, not the CBN. The recent decision to lift FX restrictions on these items aims to enhance liquidity in the FX market.
Cardoso highlighted that the initial restrictions had unintended consequences, such as increased demand for FX in the parallel market, leading to a depreciation of the exchange rate and a widened premium between the parallel and official markets.
He noted that during the restriction period, there was a 51.0% increase in trade evasion by importers, resulting in a decrease in revenue by approximately $1.4 billion from 2015 to 2019.
The governor underscored the importance of recognizing the distinction between the CBN’s role and that of fiscal authorities in trade policy.
The recent move to remove FX restrictions on the 43 items is part of the CBN’s efforts to address the challenges posed by the previous policy and boost liquidity in the FX market.
Cardoso also highlighted the negligible benefits of trade gains for the general population during the restriction period, as the average industry in Nigeria paid 13.7% more for its inputs.
The removal of the FX restrictions is expected to ease pressure on the parallel market and contribute to a more balanced and efficient FX market.
