Cardoso Dispels Misconception: 43 Items Were Never Fully Banned, Clarifies Situation

The Central Bank of Nigeria (CBN) Governor, Yemi Cardoso, addressed misconceptions surrounding the 43 restricted items on the CBN list, clarifying that they were not outrightly banned but were only restricted from accessing foreign exchange (FX) at the official market. This clarification was made during the 58th Annual Bankers’ Dinner organized by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos.

Cardoso emphasized that trade policy, particularly concerning the importation and sale of the 43 items, falls within the jurisdiction of fiscal authorities, not the CBN. He stressed the importance of distinguishing the CBN’s role in removing foreign exchange restrictions on these items from the responsibilities of other government agencies.

Initially reported by InfoStride News, the CBN, in June 2015, issued a circular listing 41 items ineligible for foreign exchange in the country’s currency market. The list was later updated to include two more items. However, on October 12, 2023, the CBN announced the removal of the foreign exchange ban on various items, including rice, vegetable oil, and poultry products.

Cardoso provided further clarification, stating, “Firstly, it is important to note that these items were never outrightly banned by the government. The CBN had imposed restrictions on their access to foreign exchange in the official market.” He explained that these restrictions led to increased demand for foreign exchange in the parallel market, causing a depreciation of the exchange rate and widening the premium between the parallel and official markets.

The 43 restricted items exerted pressure on the parallel market, resulting in a significant gap between the official and parallel market rates. Cardoso revealed that during the period of restriction, there was a 51.0 percent increase in trade evasion, leading to a decrease in revenue by approximately $1.4 billion, equivalent to $275 million per year from 2015 to 2019.

Furthermore, he highlighted that revenue from tariffs on goods decreased from around $920 million in 2011 to about $250 million in 2017. Even in 2019, when the actual tariff on goods stood at $320 million, counterfactual evidence suggested that as much as $680 million could have been earned in the same year.

Cardoso reiterated the CBN’s position that lifting the ban was aimed at boosting liquidity in the foreign exchange market. He referenced a circular from October that stated, “Removing these restrictions eliminates the need for importers of these products to go to the parallel market, reducing the pressure on the naira.” The CBN had argued that the previous FX restrictions had implications on inflation, causing the prices of affected goods to increase.

In addition, Cardoso pointed out that the benefits of trade gains for the general population were minimal, as the average industry in Nigeria paid 13.7 percent more for its inputs. This further justified the CBN’s decision to remove the restrictions and enhance liquidity in the foreign exchange market.