Foreign exchange bubbles: CBN To Relax Policy

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  Shippers Council Engages CBN

• OPS, Others Lament

The Central Bank of Nigeria (CBN) may have yielded to the complaints of the Nigerian Shippers Council(NSC) for a review of the  restrictive foreign exchange policies introduced last June, 2015, described as a major death blow to international trade in the country.

MMS Plus gathered that on the strength of deluge of complaints from the organized private sector groups, trading associations, shippers associations and freight forwarders, the NSC had contacted the apex bank which had shown its disposition to yield to relaxing some of the policies and had in turn called for a meeting between it and NSC to resolve areas considered grey in the policies.

CBN had in a circular issued on June 23, 2015 emphasized that the 41 items were not prohibited or banned, but, “it only means that importers of these items are no longer qualified to get foreign exchange from the CBN or the official market to buy these items from overseas.”

The products are: Rice, Cement, Margarine, Palm kernel/Palm oil products/vegetables oils, Meat and processed meat products, Vegetables and processed vegetable products, Poultry chicken, eggs, turkey, Private airplanes/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 particle boards 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.

This policy measure followed with the prohibition of cash lodgments into domiciliary accounts, worsening the naira condition in the parallel market.

But apparently not satisfied with the envisioned impact of the policy so far, the apex again on October 23, 2015 via a circular entitled: Re: inclusion of some imported goods and services on the list of items not valid for foreign exchange in the Nigerian foreign exchange markets, instructed all banks and Bureau De Change (BDC) in the country not to provide foreign exchange for any of the 41 items in respect of Forms ‘M’ established after June 23, 2015.

According to the circular, “confirmed/unconfirmed Letters of Credit established before the release of the circular of June 23, 2015 in respect of the 41 items excluded from the foreign exchange market can now be paid from interbank foreign exchange market”.

It further directed banks to render weekly returns on the negotiated letters of credit to the relevant Director of CBN.

However, speaking with MMS Plus, the Nigerian Shippers Council team were optimistic that the meeting would bring a reprieve to Nigerian Shippers.

Meanwhile, the Nigeria Customs Service (NCS) has complained about the adverse effects of the CBN policy on its revenue figures.

The Customs Area Controller CAC) of Apapa Area1 command of NCS, Compt. Charles Edike last week in Lagos told stakeholders that the command collected N23.8billion in September, 2015 as against N30.4billion it generated in the corresponding period last year, representing about 22 percent loss of revenue.

Lamenting that the situation will not get better soon, he attributed the decrease to the low level of importation, which he asserted was as a result of some government policies especially that of the CBN.

In his words: “Since the CBN policy was rolled, for the first three months, the remnant that came in were the ones we have been clearing but the remnant is now dwindling, finishing and so that explains why this month may not be as rosy as the previous month was. We also know that so many containers are trapped in the port.”

The Lagos Chambers of Commerce and Industry (LCCI) and Manufacturers Association of Nigeria (MAN), freight forwarding groups, have severally condemned the policy on 41 items.

According to Remi Bello, President of LCCI, “The tight exchange control and administrative allocation of foreign exchange are typically characterized by lack of transparency, corruption and considerable abuse.”