Governor Cardoso Criticizes Emefele’s Forex Restrictions On Rice And More

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Cardoso stated that there is no evidence supporting the idea that the forex restrictions imposed by the central bank on certain items had a positive impact on the general population or the economy…CONTINUE READING

The Governor of the Central Bank of Nigeria (CBN) made this declaration during the 58th Annual Bankers’ Dinner organized by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos State on Friday.

According to Cardoso, available evidence indicates that the forex restrictions adversely affected Nigerian households, contributing to inflationary pressures, which ultimately led to the decision to lift the restriction.

He highlighted that these restrictions increased the demand for foreign exchange in the parallel market, resulting in exchange rate depreciation in that segment of the Nigerian Foreign Exchange Market and widening the premium between the parallel and official markets.

Cardoso clarified that, contrary to public belief, the 43 items were never explicitly prohibited from importation or sale in the country.

He cited studies revealing a 51.0 percent increase in trade evasion by importers accessing the foreign exchange market when the 43 items were restricted, causing a revenue drop of approximately $1.4 billion, or $275 million annually, between 2015 and 2019.

The CBN governor emphasized that the reduction of trade restrictions and levies on rice, sugar, and wheat by 50.0 percent had minimal impact on welfare, with only a 0.8 percent improvement and a mere 0.4 percent reduction in extreme poverty.

Cardoso explained that the end of the restriction would boost liquidity in the Nigerian foreign exchange market, with interventions decreasing as liquidity improves.

However, he clarified that the CBN had implemented restrictions on accessing foreign exchange for the importation of these items, emphasizing that trade policy matters are primarily within the domain of fiscal authorities, not the CBN. This distinction underscores that the CBN’s decision to lift forex restrictions was not intended to infringe upon the responsibilities of other government agencies.

In June 2015, the CBN published a circular listing imported goods and services ineligible for foreign exchange in the Nigerian foreign currency market, originally numbering 41 but later updated to include two more items.

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