Items in the Nigerian FX market are not valid for foreign exchange (FX)

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In an effort to maintain the stability of the Forex (FX) market and ensure efficient use of foreign exchange to get the best out of imported goods and services in Nigeria, the Central Bank of Nigeria (CBN) has recently issued a new directive issuing a circular.

The directive exempts some imported goods and services from the list of eligible items for FX access to the Nigerian foreign exchange market to encourage and support local production of these items in the country.

The effect of this development is that importers wishing to import any of the items listed in the CBN directives described earlier will need to source FX funds without any recourse in the Nigerian foreign exchange market (interbank market and BBN intervention).

The list of damaged items is described below but can be reviewed as soon as the requirements arise. However, please note that the import of these items is not prohibited.

Items include the following:

Rice

Cement

Margarine

Palm kernels / palm oil products / vegetable oils

Meat and processed meat products

Vegetables and processed vegetable products

Poultry, eggs, turkey

Private jet / aircraft

Indian incense

Tinned Fish Sauce (Gaisha) / Sardines

Cold rolled steel sheet

Forged steel sheet

Roofing

Wheelbarrow

Head pans

Metal boxes and containers

Enamelwar

Steel drums

Steel pipe

Wire rod (distorted and not distorted)

Iron rod and strong bird

Wire mesh

Steel nails

Protection and razor wine

Wood particle boards and panels

Wood fiber boards and panels

Plywood boards and panels

Wooden door

Toothpicks

Glass and glassware

Basnadi in the kitchen

Tableware

Tiles-disputed and ceramic

Textile

Woven fabric

Clothing

Plastic and rubber products, polypropylene granules, cellophane wrappers

Soap and cosmetics

Prevents tomatoes / tomatoes

Eurobond / Foreign Currency Bonds / Share Purchase

In our view we should refer to share purchases (40 items in the list) with Nigeria that access the foreign exchange market for investing in foreign securities and not foreign investors investing money in Nigeria for investment purposes.

The CBN said the move was aimed at maintaining the stability of the foreign exchange market and encouraging local production of these items as well as ensuring efficient use of foreign currency. The CBN further clarified that the import of these items is not prohibited, but the importers of these items will use their own funds without resorting to the Nigerian foreign exchange market.

This means that demand in the public market will decrease, which means that the pressure on the public FX market has decreased. However, in the parallel market (Bureau de Change) the pressure will increase. The gap between the parallel and official markets will widen and the rate for the dollar in the parallel market will increase. This will increase the price of these items locally for consumers and for this final inflation.

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