Any firm found smuggling into the country goods for which access to foreign exchange (forex) has been restricted will have its bank accounts closed, the Central Bank of Nigeria (CBN) warned yesterday.
The apex bank curbed access to dollars in 2015 for firms importing 42 items, ranging from rice and soap, to private jets and Indian incense in a bid to conserve foreign reserves and diversify the economy.
It added one item to the list last year.
“Once we discover that people are using illicit foreign exchange to import those items into Nigeria and smuggle them through the borders … we have every right to close their accounts,” the apex bank told Reuters.
President Muhammadu Buhari has made boosting the agricultural sector a key priority to cutting import bill. In April, the government announced plans to double manufacturing output to 20 per cent of Gross Domestic Product (GDP) within six years.
The President was inaugurated for second term on May 29, weeks after re-appointing CBN Godwin Emefiele for a second term.
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Emefiele’s reappointment signalled policy stability and broke a trend of Nigerian central bankers serving a single term.
After introducing currency restrictions in 2015, the apex bank introduced a multiple exchange rate regime which has masked pressure on the currency and helped to keep it stable.
Emefiele said the bank had been developing home-grown policies to surmount challenges that confronted the economy lately.
He said: “As I have always emphasised, it is our collective duty to ensure that the potential and prospects of the economy are optimally realised.
“The ongoing economic recovery requires the joint efforts and wise counsel of everyone, if we must take giant strides forward. The CBN is more determined now than ever to remain at the forefront of efforts to ensure that the rebound is not overturned.”
Speaking at a meeting with bankers in Lagos on the theme: “Strengthening the economic recovery process in Nigeria”, the CBN boss said: “With regards to over-dependence in imports, the economic recession triggered mainly by the drop in crude oil prices, only strengthened the case for moving from a nation wholly dependent on consumption, to a nation that produces a large proportion of what it needs, particularly in areas where the resources needed for production are widely available across the country.
“This thought process, he said, shaped decision to impose the restriction on access to forex for 43 items that can be produced in Nigeria.
“There has been considerable discourse particularly on whether the restriction on access to foreign exchange for 43 items is driving local production, with some nay-sayers stating that it has constrained productivity and growth in the economy.
“Based on our internal research conducted at the Central Bank of Nigeria, there is strong support that the recovery of our economy from the recession may have been much weaker or even negative, without the implementation of the restriction on 43 items.
“Our research supports the conclusion that the combination of the restriction on 43 items along with other measures imposed by the fiscal and monetary authorities has helped to promote the recovery.
“Any attempt to reverse the course of this action may have untold consequences on the growth trajectory of our economy particularly in our push to diversify and restructure our economy. In fact, recommendations are being made to the CBN that the list of 43 items be expanded to include other additional items that can be locally produced.”
Emefiele said many entrepreneurs were taking advantage of this policy to venture into the domestic production of the restricted items with remarkable success and great positive impact on employment.
He said: “The dramatic decline in our import bill and the increase in domestic production of these items attest to the efficacy of this policy. Noticeable declines were steadily recorded in our monthly food import bill from $665.4 million in January 2015 to $160.4 million as at October 2018; a cumulative fall of 75.9 per cent and an implied savings of over $21 billion on food imports alone over that period.
“Most evident were the 97.3 per cent cumulative reduction in monthly rice import bills, 99.6 per cent in fish, 81.3 per cent in milk, 63.7 per cent in sugar, and 60.5 per cent in wheat.