UPDATED: CBN to give forex to small-scale importers of items not valid for FX

The Central Bank of Nigeria (CBN) says small-scale importers of items not valid for foreign exchange via the official window, now qualify for forex.

“Importers of items classified as not valid for forex with transactions value of $20,000 and below per quarter shall now qualify for allocation of foreign exchange,” the bank said in a circular quoted by Reuters.

Consequently, businesses with transaction value above $20,000 per quarter, remain barred from receiving foreign exchange from the official interbank window.

In June 2015, less than a month after President Muhammadu Buhari took office, the CBN placed capital controls on the country’s flow of foreign exchange in a bid to conserve scarce forex.

The CBN listed 41 items as ineligible for foreign exchange via the official window to include; toothpick, tomato paste, rice, cement, margarine, private jets.

Godwin Emefiele, governor of the CBN, had argued that aim of the restriction was to drive local production of goods and services within the Nigerian system.

Emefiele had said Nigeria could not continue to import items like toothpick with scarce foreign exchange.

On Monday, Vice-President Yemi Osinbajo said the federal government was nudging the CBN to replace some of the 41 items not eligible for foreign exchange in a bid to stabilise the forex market.

“In stabilising the macroeconomic environment, we’ve focused on aligning our fiscal and monetary policy, and nudging the central bank in the general direction of allowing a more market-determined exchange rate,” Osinbajo had said.

“We are also working on replacing some of the 41 items not valid for foreign exchange with a more trade policy driven alternative. Taking into account those items that are required and locally unavailable, which we must continue to import.”

Isaac Okorafor, the CBN spokesman, said the bank remains resolute in its plan to converge foreign exchange rates in the country.

The bank said only $65.94 million out of the $100 million offered by it at the inter-bank wholesale transactions concluded on Wednesday, as dollar glut looms in the country.

On Wednesday, the bank offered another $150 million to be auctioned at the wholesale windows of the inter-bank market.