The Central Bank of Nigeria, CBN, has recently made a significant announcement that marks a turning point in the country’s trade policies. On Thursday, the CBN officially lifted the ban on 43 items that were previously restricted from accessing foreign exchange (forex) from the investor’s and exporters’, I&E, window. This move opens up new possibilities for trade and has generated particular interest in the rice importation sector.
The CBN’s history of forex restrictions
To appreciate the significance of this development, it’s important to understand the context. In 2015, the CBN first restricted 41 items from accessing foreign exchange (FX) from the I&E window, which was Nigeria’s official market for foreign exchange. This meant that importers of these commodities were forced to source FX from the black market, often at higher rates. Over the years, the list of restricted items grew, with two more additions in 2018 and 2020.
Full List of 43 Items
Here’s the full list of the 43 items that were previously restricted:
Rice
Cement
Margarine
Palm kernel/palm oil products/vegetable oils
Meat and processed meat products
Vegetables and processed vegetable products
Poultry chicken, eggs, turkey
Private airplanes/jets
Indian incense
Tinned fish in sauce (geisha)/sardines
Cold rolled steel sheets
Galvanized steel sheets
Roofing sheets
Wheelbarrows
Head pans
Metal boxes and containers
Enamelware
Steel drums
Steel pipes
Wire rods (deformed and not deformed)
Iron rods and reinforcing bars
Wire mesh
Steel nails
Security and razor wire
Wood particle boards and panels
Wood fiber boards and panels
Plywood boards and panels
Wooden doors
Furniture
Toothpicks
Glass and glassware
Kitchen utensils
Tableware
Tiles – vitrified and ceramic
Textiles
Woven fabrics
Clothes
Plastic and rubber products, cellophane wrappers
Soap and cosmetics
Tomatoes/tomato pastes
Euro bond/foreign currency bond/share purchases
Maize/corn
Fertilizer
Rice importation and the border situation
The recent announcement by the CBN has stirred interest, particularly in the rice importation sector. Many in the northern region had relied on illegal border crossings with Niger to import rice due to previous restrictions. However, the closure of borders with Niger and sanctions imposed on the country by ECOWAS have disrupted these traditional routes. This situation, coupled with the closure of the border with Benin Republic, has made rice importation more expensive for Niger, which, in turn, impacts the northern region of Nigeria.
Will rice become cheaper?
The question many are asking is whether rice will become more affordable in the market after these changes. According to recent investigations, the landing cost of importing rice to Nigeria is not expected to exceed N18,000 Naira. This implies that a wholesale price of N25,000 could be possible. After factoring in transportation and other expenses, sellers may be able to offer rice for N30,000 or even less.
However, the actual price reduction will depend on various factors, including transportation costs, distribution, and market dynamics. It’s crucial for the government to communicate these changes clearly to the public, especially in the northern regions, to avoid confusion and encourage compliance with legal importation channels.
The CBN’s decision to lift the ban on 43 items, including rice, is a significant step towards opening up legal and transparent trade channels. While this change offers the potential for more affordable rice in the market, it’s essential for all stakeholders to work together to ensure the success of this transition. Clarity in communication and efficient trade mechanisms will be crucial in making the most of this new era in Nigeria’s trade policies.
Sadiq Iliyasu Danbatta writes from Kano
