By Adedapo Adesanya
The Central Bank of Nigeria (CBN) has noted that the 43 non-eligible items remain banned despite the unification of the foreign exchange markets, which eliminates the segmentation that created a disparity and arbitrage in rates.
In an explainer on its Twitter page on Friday, the apex bank in slides noted that the status quo remains on the 43 non-eligible items that are not permitted to access FX at the Investors and Exporters (I&E) window despite the exchange rate unification.
The 43 banned items are a list of goods that cannot be funded from the official window, meaning importers will have to source the funds from the parallel market. Some of these items include rice, cement, margarine, palm oil products/vegetable oils, tomato paste, meat and processed meat products, vegetables and processed vegetable products, and poultry, among others.
The apex bank first announced such restriction in June 2015, noting that it would help conserve limited foreign exchange and encourage local production, and in the last eight years, two items have been added, culminating in 43 items, including maize.
Many importers expected that the collapse of the multiple exchange rate, as announced by CBN on Wednesday, would mean they will be able to source the much-needed forex at the official rate.
This drawback will likely push them to source this at the parallel market, which by the principle of the changes, should no longer exist.
Due to a huge backlog, the exchange rate could see rising differences in rates.
The CBN had explained that the collapse of all segments into the I&E window meant that all eligible FX transactions in the market “shall only be done via the I&E window, all windows cease to exist.”
The window will function under a willing buyer, willing seller system. This means an entity with demand for FX will look for another person with FX to sell at an agreed price through an authorised dealer.
While providing an answer to the question regarding if the 43 non-eligible items can access FX at the I&E window, the central bank said, “The status quo remains on the 43 non-eligible items. The items are not permitted to be funded from the I&E window.”
