CBN Restricts Sale of Forex for Importation of Sugar, Wheat

By Aduragbemi Omiyale

The Central Bank of Nigeria (CBN) has expanded the list of food items not qualify for foreign exchange (forex) for importation as any of the regulated FX market segments.

Exchange rates in operation

The central bank operates three key forex windows and they have special rates the Dollar is exchanged for the Naira.

The first is the official exchange rate segment called the interbank. This is where government Dollar transactions are priced and the rate as of Thursday was N379/$1.

The second is the Investors and Exporters (I&E) window and it is for those who bring in items into the country and the rate as of yesterday was N410.50/$1, while the third is the Bureaux De Change (BDC) segment, which caters for foreign travels, medicals, school fees, amongst others and the rate is N410/$1.

Those who do not qualify or are unable to source for forex at these regulated windows usual approach the unregulated market segment fondly called the black market or the parallel market.

At the close of business yesterday, the exchange rate of the Naira to the Dollar at this window was N480/$1.

The expanded FX restriction list

On Friday, the central bank announced that it has added sugar and wheat to its FX restriction list, which already boasts of over 40 food items like tomato/tomato pastes, toothpick, soap and cosmetics, cloth, textiles, tiles, kitchen utensils, milk, maize, amongst others.

In a post on its verified Twitter handle, the CBN quoted its Governor, Mr Godwin Emefiele, as saying that, “Sugar and wheat to go into our FX restriction list. We must work together to produce these items in Nigeria rather than import them.”

The restriction of FX for the importation of sugar and wheat is coming at a time three major players in the sugar industry, Dangote Group, BUA Group and Flour Mills are having disagreements.

The implication of the addition

With the latest development, those who intend to import sugar and wheat into Nigeria will have to source for forex at the black market, which will make the price rise at the market because of the exchange rate.

The option left for them is to key into the backward integration policy of the federal government by investing in the local production of sugar.