EXCLUSIVE: CBN to implement ban on FX for food import ‘in phases’

The Central Bank of Nigeria (CBN) is happy with President Muhammadu Buhari’s latest directive on restricting forex for food importation, TheCable understands.

Insiders at the apex bank told TheCable that the directive will be implemented in phases so that the impact on food prices and inflation can be managed.

“A lot of times CBN is hindered in implementing macroeconomic policies because of pressure from political actors who think their interests would be hurt,” the source said.

With the president’s directive, the source says the apex bank’s hierarchy can now implement the policy without fear of interference from politicians and ministers.

In a statement signed by Garba Shehu, a presidential spokesman, on Tuesday, the president announced that he has asked the CBN to stop providing foreign exchange for food importation.

This directive, he said, would ensure the steady improvement in agricultural production and attainment of full food security.

There have been comments from various quarters criticising the president for the directive.

Kingsley Mogahalu, former CBN deputy governor, said the directive is against the independence of the CBN.

“The issue here isn’t whether or not CBN should allow access to forex for food imports. It is about whether such an economic policy of a central bank should be imposed by a political authority. A major reason for our poverty, instability and weak economy is weak institutions,” he said.

Our marketplace should be regulated and guided in a rational manner that creates a level playing field. Our economy will not be saved by Ad Hoc political decisions like this, handed down by the very institutions that should be shielded from the whim and caprice of politicians.

— Kingsley Moghalu OON (@MoghaluKingsley) August 13, 2019

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FOREX RESTRICTION REGIME

In 2015, the CBN announced that it had banned forex for the importation of 41 items saying the move would conserve scarce forex and encourage local production.

The items banned at the time were:

• Rice
• Cement
• Margarine
• Palm kernel/Palm oil products/vegetable oils
• Meat and processed meat products
• Vegetables and processed vegetable products
• Poultry chicken, eggs, turkey
• Private aeroplanes/jets
• Indian incense
• Tinned fish in sauce(Geisha)/sardines
• Cold rolled steel sheets
• Galvanized steel sheets
• Roofing sheets
• Wheelbarrows
• Head pans
• Metal boxes and containers
• Enamelware
• Steel drums
• Steel pipes
• Wire rods(deformed and not deformed)
• Iron rods and reinforcing bard
• Wire mesh
• Steel nails
• Security  and razor wine
• Wood particleboards and panels
• Wood Fibre Boards and Panels
• Plywood boards and panels
• Wooden doors
• Toothpicks
• Glass and Glassware
• Kitchen utensils
• Tableware
• Tiles-vitrified and ceramic
• Textiles
• Woven fabrics
• Clothes
• Plastic and rubber products, polypropylene granules, cellophane wrappers
• Soap and cosmetics
• Tomatoes/tomato pastes
• Eurobond/foreign currency bond/ share purchases

In December 2018, fertiliser was added to the list bringing the total banned items to 42.

In March, the apex bank announced that commercial banks and bureaux de change operators in the country should stop the sale of forex to importers of clothing materials.

At the last meeting of its monetary policy committee, Godwin Emefiele, the CBN governor, announced the bank’s plans to restrict forex for milk importation.

“We believe that milk is one of those products that can be produced in Nigeria. Milk importation has been going on in Nigeria for over 60 years. If you Google West African Milk or Friesland Campina today, they say that they have been importing milk and that they have been in Nigeria for over 60 years,” he said.

“Today, the import of milk annually stands at $1.2-$1.5 billion. That is a very high import product into the country. Given that it is a product that we are convinced that it is a product that can be produced in Nigeria.”