CBN clarifies on legitimate items to access forex

In order clarify the misconception about the items valid for forex, the Central Bank of Nigeria (CBN) has released a 36-item list of materials that it considers ‘Valid for foreign exchange.’

In a new circular signed by the Director, Trade and Exchange department, CBN, W.D Gotring, the apex bank released the complete list of 36 items, hitherto banned, that now qualify for forex.

In response to the confusion emanating from its circular dated May 3rd 2015, wherein the apex bank had announced that items classified as valid for forex shall now qualify for allocation of forex, it issued an updated version (now removed from the website of the CBN) clarifying that the original 41 banned items (hitherto referred to as not valid for forex) still remained banned.

However, there were indications that the CBN, seems to be relaxing the ban on various sub-items especially those that are essential for manufacturing purposes.

This could be an aftermath of increasing pressure from manufacturers, who through their various associations, and at various occasions, have been pressing for a relaxation on the banned items.

For them, many of the raw materials required for their production activities were inadvertently included in the broad groups of the initial list.

For instance, President, Manufacturer Association of Nigeria (MAN) Dr. Frank Udemba Jacobs, recently highlighted that the association has done an analysis on the banned items and “we broke the 41 items into 110 and of the 110, 75 are raw materials for our members. It is these 75 items we ask the Federal Government to remove from the list so that our members can source forex to buy their raw materials.”

The CBN had thus, in releasing a list of 41 items, bundled up several other sub-items which are essential inputs for several manufactured goods.

The custom list of imported items, for example includes about 5,925 items all broken down into their individual nomenclature and HS codes, instead of their cluster or compound name.

However, in the circular referred to by the CBN, revealing that items earlier declared as not valid for forex but now valid, the CBN had placed restrictions.

For example, these items were for small-scale importers who are restricted to a maximum of $20,000 per quarter as allocation for imports.

The latest circular listing out items now eligible for forex, did not clearly state if there are limits to how much forex they can buy and at what rate or of it remains for small-scale importers.

According to the CBN guideline, it noted that importers of items classified as not valid for forex with transactions value of $20,000 and below per quarter shall now qualify for allocation of foreign exchange.

Consequently, the restriction still exists for businesses with transaction value above $20,000 per quarter.

The CBN listed 41 items as ineligible for foreign exchange via the official window to include; toothpick, tomato paste, rice, cement, margarine, private jets.

Godwin Emefiele, governor of the CBN, had argued that aim of the restriction was to drive local production of goods and services within the Nigerian system.

Emefiele had said Nigeria could not continue to import items like toothpick with scarce foreign exchange.