The directive exempts certain imported goods and services from the list of articles eligible for access to FX in the Nigeria Foreign Exchange in order to promote and support the local production of these items in the country.
The implication of this development is that importers wishing to import any of the items listed in the aforementioned CBN Directive would be bound to (Interbank Market and BBN Intervention).
The list of affected items is described below, but may be revised as need arises. However, please note that importing these items is not prohibited.
Items include the following:
Palm Almond / Palm oils / Vegetable oils
Meat and processed meat products
Processed vegetables and vegetables
Chicken, eggs, turkey poultry
Private airplanes / jets
Canned fish in sauce (Geisha) / sardines
Cold-rolled sheet steel
Galvanized steel sheets
Sheets of coverage
Cases and containers made of metal
Wire wires (deformed and non-deformed)
Reinforcement iron and bard bars
Stainless Steel Nails
Safety wine and razor
Panels and panels made of wood in pieces
Wood fiber panels and boards
Panels and panels made of plywood
Glass and glass products
Glazed and ceramic tiles
Textiles & Leather Products
Clothing & Accessories
Plastic and rubber products, polypropylene granules, cellophane wrappings
Soaps and cosmetics
Tomatoes / Tomato Paste
In our opinion, we understand Stock Purchases (item 40 in the list) referring to Nigerians who access the foreign exchange market to invest in foreign securities and not foreign investors who enter funds in Nigeria for investment purposes.
The CBN stated that this was in an attempt to maintain the stability of the foreign exchange market and ensure the efficient use of foreign exchange by encouraging the local production of these units. CBN also clearly stated that importing such items is not prohibited, however importers of such items must do so using their own funds without resorting to the foreign exchange markets of Nigeria.
The implication of this is that there will be Reduced Demand in the official market, which means a reduced pressure on the official FX market. However, there will be more pressure on the parallel market (Bureau de Change). The difference between the parallel and the official market will widen and the dollar rate in the parallel market will increase. This will also lead to an increase in the cost of these items locally for consumers and ultimately inflation.
Source by Richard Chijioke Chukwunagorom