CBN May Expand List of Restricted Items from Forex Market


• States to get bailout funds this week
Obinna Chima

The Central Bank of Nigeria (CBN) has said it may increase the list of items excluded for funding from the official foreign exchange (forex) market as it seeks to reduce pressure on the naira and preserve the country’s external reserves.
CBN Governor, Mr. Godwin Ifeanyi Emefiele, said this during an exclusive interview with THISDAY in Lagos at the weekend.


The CBN recently restricted importers of 41 items from accessing forex at the official foreign exchange market. Some of the items include toothpicks, rice, wheel barrows, head pans, cement, margarine, palm kernel/vegetable oil, meat and processed meat products, vegetable and processed vegetable products, poultry, private airplanes/jet, Indian incense and tinned fish in sauce (Geisha/Sardines), among others.


The policy, according to the central bank, was also designed to facilitate the resuscitation of domestic industries and improve employment generation.
But some of the affected importers and members of the Lagos Chamber of Commerce and Industry (LCCI) have continued to kick against the policy.


But Emefiele said: “The truth is that as long as we find that there are more items that can be produced locally, I can assure you that we would increase the list.
“We are not saying that those 41 items cannot be imported, but we are saying that we don’t have the foreign exchange for you at the banks or at the interbank market for these.


“If you have foreign exchange from other sources, you must show us your proof of funds and where those funds are coming from. If you do not show us your proof of funds and you want to open a non-valid Form M, we would reject it.”
While acknowledging that there are some who believe that the central bank would review the policy, the governor said that: “there is nothing to review because those items were well thought out”.


He pointed out that before the central bank decided to place the items on the exclusion list, it carefully thought about them, did its research and came to the conclusion that the affected items could be produced in Nigeria.
“As long as we continue to import them, it would be difficult for our people to look inwards. We excluded them from the foreign exchange market so as to compel our people to look inwards.


“So for people to say it is something that we are going to review, I can assure you we are not going to touch it again,” he maintained.
Emefiele also clarified that it was not the central bank that directed commercial banks in the country to stop accepting foreign currency deposits, but expressed support for the decision, saying Nigeria is the only country where people go to banks and deposit foreign currencies other than the local currency.


Banks operating in the country since last week have been rejecting foreign currency deposits by their domiciliary account holders.
For instance, GTBank, in a notice to its customers at the weekend, stated: “Please be informed that due to the unavailability of outlets for managing foreign currency cash deposits, we have found it necessary to temporarily suspend receipts of foreign currency cash deposits into domiciliary accounts at all our branches nationwide from Monday, 3rd of August 2015.


“In addition, foreign currency cash deposits into domiciliary accounts made prior to this notice will not be eligible for outward electronic transfers and can only be withdrawn as cash.
“Please note that this temporary measure does not affect electronic transfer of funds into or from your domiciliary accounts and, you will continue to have access to foreign currency cash withdrawals from your account.


“Whilst we have had to take this step to temporarily suspend foreign currency cash deposits, we would like to assure you that we are working hard at finding alternative outlets and a quick solution to this situation.”

According to Emefiele, “You cannot go to the United States where the dollar is spent and try to pay pound sterling into an account, because you will be arrested.


“Neither can you go into the United States and carry euros into that economy and tell them to pay it into an account for you; you will be arrested.


“The same way you cannot go to the United Kingdom where pound sterling is their unit of currency and then you carry dollars or Chinese Renminbi and try to pay into an account, because you will be arrested.


“So when you look at why the banks took the decision, the banks decided to take that line of action because they felt that the level of foreign currency that they had in their vaults was above the optimum level that they could manage.


“Let me put it to you this way: when a bank accepts naira cash and it has excess cash in its vault, what it does is to take it to the CBN and the CBN gives them value for it.


“But when a bank has excess dollar cash in its vault, what is it going to do with it? If they take it to the CBN, what is the central bank going to do with it?
“So what you will find is that if they continue to accept it from bank customers, it becomes a useless piece of paper in their vaults because it is a non-earning asset.


“So that is why you are not going to blame banks that say they have excess foreign currency in their vaults and do not need it again because they don’t have a mechanism through which they can dispose of it and get real value.
“Don’t forget, when you deposit your dollars into your domiciliary account in a bank and you go abroad and spend money using your electronic card, that bank uses its own wired electronic money sitting in its correspondent bank abroad to meet your obligation, whereas your dollar cash is sitting in its vault.


“So that bank has to have a way of transferring that money from its vault into an electronic format to clear the obligation created abroad. As a result of currency substitution and the high incidence of people trying to hide their illicit wealth, the level of foreign currency in our system has ballooned such that the banks can’t cope with it again. That is why we are where we are today.”


He, however, added that by supporting banks to reject foreign cash deposits, neither the central bank nor the banks were tampering with customers’ ability to operate domiciliary accounts.


Emefiele urged Nigerians who want to conduct legitimate transactions such as the payment of school fees, medical bills, mortgages and other bills, to just walk into their banks, fill the Form A and support such transactions with the relevant invoices and the foreign currency would be wired on their behalf.


Emefiele further revealed that the proposed N300 billion special intervention fund for the states would be disbursed this week to enable them meet their obligations to workers who have not paid their salaries, adding that 27 states had applied for the loan.


“On the issue of the intervention that is going to the state governments for them to pay outstanding salaries, I am optimistic that this week, that money would be made available to the states. About 27 states have applied,” he said.

http://www.thisdaylive.com/articles/cbn-may-expand-list-of-restricted-items-from

CBN on point on this, let the parallel market be flooded with dollars and the naira will be strengthen.

Attached is the list of the 40 items.

http://nairametrics.com/cbn-bans-toothpick-indian-incense-and-these-38-other-imported-items-from-fx-market/

Expanding this list will be interesting once the items can be manufactured locally.

buhari will kill this country soon.mark my word.

Some jokers will come around to tell us that the ban is targeted at their trading business that is killing employment in Nigeria.

jimi4us:
buhari will kill this country soon.mark my word.

Buhari did not appoint Emefiele but Jonathan did. Why do you think this policy is detrimental? In a similar report Dangote lauded Emefiele citing that it was a similar foreign exchange import restriction carried out by the Obasanjo regime that led to self sufficiency in Nigerian cement sector.

When people keep saying Naira is valueless and Nigerians are poor, what is the reason behind this poverty is one question the common man does not ask himself and does not care to answer.

Placing restrictions on any item that can be produced locally transforms to job creation, revival and support for local industry, preservation of the currency value and foreign exchange earnings. In another report Nigeria banks have started refusing dollar denominated deposits into domiciliary accounts. Can you as a Nigerian travel to America and open a Naira account? What of Pound or Euro accounts? NO. Now why do Nigerian banks promote foreign currencies by allowing individual account holders to bank in a foreign currency?

If you will be careful to understand these things then you discover Nigerians are the ones killing the Nigerian economy.