CBN Tackles IMF on Forex Restriction Policy Over FDI Inflow

Forex Restriction Policy
Image Credit: Premium Times

By Adedapo Adesanya

Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, has opposed the observation put forth by the International Monetary Fund (IMF) that restrictions placed by the federal government on foreign exchange on some items was impeding the flow of Foreign Direct Investments (FDIs) into Nigeria.

The CBN chief made his stance known on Sunday while briefing journalists on the sidelines at the 2019 IMF and World Bank Annual Meetings in Washington DC., the United States.

He said that the IMF stance on FDIs being affected by goods that could be produced locally as a result of forex was false, pointing out that, “If you are a foreign direct investor that is interested in doing business in Nigeria, I will say instead of you facilitating the import of these items into Nigeria, we want you to come and produce it in Nigeria.”

Making his disagreement with the global lender clearer, Mr Emefiele said that the Nigerian market was large enough to accommodate investment that will bring about returns, noting that, “Nigeria is a market of over 200 million people. So, bring your investment plans and equipment, come and produce those items in Nigeria, you will make your profit and take your dividend out of the country. So, I disagree with the IMF position.”

The restrictions placed on 43 items by the federal government received criticism by the IMF last week when the agency’s Divisional Chief, Research Department, Oya Celasun, told a news conference on the World Economic Outlook at the meetings that the policy was holding back FDIs into the Nigerian local economy.

He said the decision to restrict forex access and shut the official foreign exchange window for the importation of the banned 43 items would protect Nigeria’s foreign reserves, as well as the nation’s economy.

According to him, the policy was introduced to stimulate the domestic economy and enhance domestic production and protect local industries from undue foreign competition and take-over.

But Celasun said the policy was working to the contrary, pointing out that Nigeria’s growth has been weak, even as he gave hope that growth would pick up next year with support from the agricultural sector, which will enable the country to spend more on priorities, such as social safety and infrastructure.

“There is need for the strengthening of the banking system and unified exchange rate system. Foreign exchange restrictions have also been distorting the public and private sector decisions and holding back investment.

“Therefore, strengthening the banking sector resilience and continued stronger structural reforms, especially in infrastructure, power sector and broader governance, are critical.” He said.

However, this was met with opposition by the apex bank chief who said the policy was put together to serve Nigeria’s best interest.


Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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