Business Post Contributor
By Bliss Okperan
A former bank managing director, Mr Chika Mbonu, has advised the federal government to consider raising import duty on the 43 items the Central Bank of Nigeria (CBN) allowed to access foreign exchange (FX) in the official window for importation last week.
In 2015, the apex bank under Mr Godwin Emefiele, placed a forex embargo on 41 items and added two items to the list a few years ago.
Though importers of the products, including rice, cement, sugar and others were not prohibited from bringing them into the country, they were not allowed to get FX for importing them at the Investors and Exporters (I&E) segment.
Last week, the central bank, under the control of Mr Yemi Cardoso, in a bid to ease the pressure on the Naira in the forex market, lifted the restrictions.
The CBN, in a message after the action, assured that it would not affect local production of the items earlier on the list.
In his analysis on Arise TV on Monday, Mr Mbonu said local manufacturers of rice, cement and others would not be affected by the policy reversal only if the federal government, which is in charge of trade policies, which falls under fiscal policies, increases import duty on the items.
According to him, if the government fails to do this, importers of the 43 items would chase local producers out of the market because they would bring in the products at cheaper rates, making it difficult for domestic manufacturers to meet up because of high production costs.
“The success depends on having the right duties and levies. Still protecting the local industries with the right tariffs structure and fees and levies and making sure our borders are not thrown open for goods that are smuggled in,” the analyst said during the Global Business Report this morning.
“One of the downsides or criticisms for that policy of actually banning is, CBN is moving from the monetary policy and crossing over to the terrain of trade policy which is actually more of the fiscal side, he added, noting that cheap alternatives without duties and taxes would be dumped in Nigeria and would wipe away production in the country.
“What you use to discourage import or export is usually duties, tariffs and levies and that’s what you normally do.”
“To nations that want to protect their local markets, they allow imports to come in but be ready to pay the right duties,” he stated.
