Emmanuel OchayiThe Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso has revealed losses amounting to $1.4 billion over eight years due to the CBN’s ban on 43 items.
Cardoso made this revelation at the 58th Annual Bankers’ Dinner organized by the Chartered Institute of Bankers of Nigeria (CIBN)
Join our WhatsApp Channel“Let me clarify the issue of the 43 items,” he emphasized, shedding light on the restrictions imposed by the apex bank on accessing foreign exchange for importing these items, rather than an outright ban by the government.
Highlighting the consequences of these restrictions, Cardoso noted a surge in trade evasion, estimating 51.0 per cent increase by importers trying to access the foreign exchange market. This resulted in an annual loss of approximately $275 million between 2015 and 2019, amounting to the colossal $1.4 billion over the eight-year span.
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Moreover, Cardoso pointed out the adverse impact on revenue from tariffs, which dropped from $920 million in 2011 to a mere $250 million in 2017, with potential earnings of up to $680 million in 2019.
The governor underscored that these restrictions had a profound effect on Nigerian households, contributing to inflationary pressures. Despite a reduction in trade restrictions and levies on essential items like rice, sugar, and wheat, the resultant welfare improvement was minimal, with only a 0.8 per cent enhancement and 0.4 per cent reduction in extreme poverty.
Elucidating the impact on industries, Cardoso stressed that the benefits of trade gains for the general populace remained marginal, with the average industry in Nigeria paying 13.7 per cent more for its inputs.
However, in a policy shift, Prime Business Africa reported the CBN’s announcemen tof the lifting of the ban on foreign exchange issuance for the importation of key items like rice, vegetable oil, and poultry products among the 43 restricted items by the previous administration.
This move is expected to inject liquidity into the Nigerian foreign exchange market, with interventions decreasing as liquidity improves, according to the CBN.
The governor’s disclosures shed light on the intricate interplay between trade policies, foreign exchange restrictions, revenue generation, and their far-reaching impacts on the Nigerian economy and households.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
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