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FULL LIST: CBN Lifts Forex Ban on 43 items Placed by Godwin Emefiele

CBN has lifted the Forex Ban on 43 items placed by Godwin Emefiele.

TheTimes reports that the Central Bank of Nigeria (CBN) under the leadership of Yemi Cardoso, has lifted the ban on 43 items imposed under the Godwin Emefiele era.

This  online news platform understands that the current lifting of Forex Ban on 43 items was disclosed in a circular by the apex bank released on Thursday, October 12, 2023.

According to the Central Bank, it will also boost liquidity in the Nigerian Foreign Exchange Market and intervene from time to time, stating that interventions will decrease as liquidity improves.

Forex Ban on 43 items lifted by the CBN:

  1. Rice
  2. Cement
  3. Margarine
  4. Palm Kernel/Palm oil products/vegetable oils
  5. Meat and Processed Meat Products
  6. Vegetables and Processed Vegetable Products
  7. Poultry – chicken, eggs, Turkey
  8. Private Airplanes/Jets
  9. Indian Incense
  10. Tinned Fish In sauce (Gelsha)/Sardines
  11. Cold Rolled Steel Sheets
  12. Galvanized Steel Sheets
  13. Roofing Sheets
  14. Wheelbarrows
  15. Head Pans
  16. Metal Boxes and Containers
  17. Enamelware
  18. Steel Drums
  19. Steel Pipes
  20. Wire Rods (deformed and not deformed)
  21. Iron Rods and ReInforcina Bars
  22. Wire Mesh
  23. Steel Nalls
  24. Security and Razor Wire
  25. Wood Particle Boards and Panels
  26. Wood Fiber Boards and Panels
  27. Plywood Boards and Panels
  28. Wooden Doors
  29. Furniture
  30. Toothpicks
  31. Glass and Glassware
  32. Kitchen Utensils
  33. Tableware
  34. Tiles – vitrified and ceramic
  35. Textiles
  36. Woven Fabrics
  37. Clothes
  38. Plastic and Rubber Products, Cellophane Wrappers
  39. Soap and cosmetics
  40. Tomatoes/Tomato Pastes
  41. Euro bond/Foreign Currency Bond/Share
  42. Milk
  43. Maize

Note: While the list is 43, each item on the list includes several other sub-items as captured by the Nigerian Customs using their import codes list.

What the CBN is saying

Under the new guidelines, the CBN said it will be championing the ‘Willing Buyer – Willing Seller’ principle, emphasizing its commitment to a market-driven exchange rate system.

  • It also said to avoid potential misinformation, participants are advised to reference foreign exchange rates only from official platforms such as the CBN website, FMDQ, and other recognized trading systems. Important to add that the disparity between the official and parallel market rates stands at a whopping 25%.
  • In a move to stabilize the market, the bank will intermittently boost liquidity in the Nigerian Foreign Exchange Market. The frequency of these interventions is expected to decline as market stability improves.
  • The CBN has also lifted prior restrictions, enabling importers of 43 items, previously barred by a 2015 Circular, to now access the Nigerian Foreign Exchange Market.
  • Addressing the longstanding FX backlog issue, the CBN pledged to intensify efforts for its clearance and further engage with stakeholders to streamline solutions.
  • Reflecting a broader vision, the bank also indicated its pursuit of a unified foreign exchange market, with consultations already underway with market players.

What this means

On lifting the ban: The decision of the central bank decision to lift the ban on 43 items signifies a major step in resolving Nigeria’s forex crisis as most critics had called on the CBN under Emefiele to lift it..

  • The 43 banned items include a list of imports that were not allowed access to forex from official sources since 2015.
  • However, some of the items remain on the ban list of customs and it is unclear if they will be funded for forex purchases.
  • It is also unclear how much demand this will drive to the official I&E window and if the central bank has the capacity to meet this demand in the short term until liquidity returns as it claimed.

On CBN’s intervention: The central bank’s decision to intervene in the forex market suggests it is now ready to provide a steady supply of forex in the official market, a situation that could strengthen the exchange rate at the black market.

  • However, it is unclear where the central bank will find forex to fund the demand considering its external reserve position is already stretched.
  • The average daily turnover for forex was around $103 million, significantly small to meet demand.
  • Most supply currently goes to the black market and will remain so if the exchange rate disparity remains above 5%.
  • The CBN also has a forex backlog of around $8 billion and another $20 billion in swaps with Nigerian banks.
  • Analysts opine the swaps might be pushed back to accommodate the apex bank’s cash flows even if it means more windfall forex profits for banks.

On referencing quotes foreign exchange rates only from official platforms such as the CBN website, FMDQ,

  • The central bank did not state if it plans to adjust the exchange rate on the FMDQ in line with market realities.
  • As earlier stated the exchange rate disparity between the official and black market rates is a whopping 25%.
  • We, therefore, expect that it is either the apex bank devalues at the I7E window or it faces the risk of arbitrage.

See excerpts of the press release below

The Central Bank of Nigeria (CBN) will continue to promote orderliness and professional conduct by all participants in the Nigerian Foreign Exchange Market to ensure market forces determine exchange rates on a Willing Buyer – Willing Seller principle.

The CB reiterates that the prevailing Foreign Exchange (FX) rates should be referenced from platforms such as the CB website, FMDQ, and other recognised or appointed trading systems to promote price discovery, transparency, and credibility in the FX rates.

As part of its responsibility to ensure price stability, the CB will boost liquidity in the Nigerian Foreign Exchange Market by interventions from time to time. As market liquidity improves, these CB interventions will gradually decrease.

Importers of all the 43 items previously restricted by the 2015 Circular referencedTED/FEM/FPC/GEN/01/010 and its addendums are now allowed to purchase foreign exchange in the Nigerian Foreign Exchange Market. The CB is committed to accelerating efforts to clear the FX backlog with existing participants and will continue dialogue with stakeholders to address the issue.

The CB has set as one of its goals the attainment of a single FX market. Consultation is ongoing with market participants to achieve this goal.
Participants and the general public are to be guided by the above.

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