Finance
CBN restricts select importers from forex
ABUJA — The Central Bank of Nigeria, CBN, yesterday said that importers of rice, cement and other products will no longer access Foreign Exchange from CBN, banks and bureaux de change for such importation.
The CBN Governor, Mr Godwin Emefiele, who disclosed this at a news conference in Abuja, said the measure would prevent further depletion of the country’s foreign reserve.
He said the country was spending huge amount to import things that could be produced locally, adding that the apex bank would not continue to support the importation of such items through the use of the hard earned foreign exchange.
Some of the products include margarine, palm kernel, palm oil products, meat and processed meat products, vegetables, private airplanes and jets, Indian incense, tinned fish, galvanised steel sheet, roofing sheet and furniture.
He said: “Importers who may want to continue importing these goods would have to sort their foreign exchange from their own private sources. The CBN will continue to be vigilant around this policy, keep reviewing the list of items as it becomes comfortable that these items can be produced locally if we apply ourselves sufficiently.
Emefiele said the CBN was forced to come up with the new policy to exclude importers of rice and 40 other items from the foreign exchange market in order to save the nation’s economy.
Speaking to journalists in Abuja, he said the time has come for Nigerians to decide what must be done to realise the much-desired economic development, rather than making the nation a dumping ground for other economies of the world.
Warns banks, bureaux de change
According to Emefiele, importers of the listed items would not be allowed access to foreign exchange even from the bureau de change and that any bank or bureaux de change that tried infractions would be severely punished.
His words: “We will not make foreign exchange available to such importers from any market. If you read that circular, it said ‘from Nigerian foreign exchange markets’, plural not singular. Foreign exchange will not be provided by the Central Bank of Nigeria, the banks or by bureaux de change. If we find people flouting it, luckily these people we have mentioned are under our regulation, we know how to deal with them.
“Sometimes, policy changes are forced on policymakers as a result of exogenous shocks beyond their control. While most people do not like to be forced to do something, one of the hallmarks of effective policymaking is to be nimble and responsive when such situations arise.
“In the case of yesterday’s (Tuesday) announcement, I am happy to inform and underscore that this policy change is in line with my long-held believe that Nigeria cannot attain its true potentials by simply importing everything. At some point, we have to all decide what we really want for our country, and I believe that the time is now right for that deep and honest conversation.”
He added that CBN’s analyses of the nation’s economic situation “compelled us to believe that we needed to aggressively begin the process of feeding ourselves by ourselves and producing much of what we need in this country.”
Emefiele noted that the nation was wasting huge amounts of money importing things that could be produced locally, a situation, he said, had become a drain on the nation’s Foreign Exchange Reserves.
It’s shameful that we have to import toothpick
According to him, “most of you are aware of the often-quoted number of N1.3 trillion, which is what we spend on average importing rice, fish, sugar, and wheat every year.
“I am saying it is shameful that we have to import toothpick. I am saying that it is shameful for us to import fish in sauce canned, fish in sauce and sardine. I am saying it is shameful. Before I was born palm kernel was taken out of Nigeria and taken to another country and today we go to that country and import palm oil. It is shameful.
“It is shameful that items that we used to produce in this country we now begin to import them. It is shameful and we need to stop them. That is what we are saying.
“Only last week, I met the Governor of Kebbi State and he lamented the unfortunate situation in that state. Where people, our own farmers, have committed themselves to producing rice and have produced paddy and we have paddy glut in Kebbi State today.
“As I speak, the government has spent its money buying paddy from the rice farmers, almost close to 200,000 of paddy rice.
“Aside from that, Kebbi State farmers have unpurchased paddy rice close to 800,000 tons. And yet we patronise imported rice. For our benefits, those rice imported to the country are those that have spent at least seven years in their stores and yet we have rice that is produced today in Nigeria and we are running away from them.
“The only way we can encourage people who are producing rice to go back to the farms is to do what we have done today.
“How can we keep complaining about the depreciation of the naira when all we do as a people is to import everything from ordinary Geisha and toothpicks to even eggs? These are some of the fundamental reasons behind the bank’s recent announcement.”
He disclosed that there was already a glut in paddy rice in parts of the country, especially Kebbi State where the government had spent huge sums of money to buy off 200,000 tons from the farmers, yet they had another 800,000 tons unpurchased.
Vanguard-
Business
Nigeria pays US$4.9 billion on petrol subsidy in 2024- NNPCL
It was however noted by Biztellers.com.ng, that although subsidy is back in effect, the main reason for that is the increasingly weak state of the Naira and the country’s extreme dependence on products importation. Also unlike the previous subsidy era, where several oil marketers were getting free subsidy refunds for unverified product importation, this subsidy era is witnessing only one importer, the NNPCL, which in effect is the sole receiver of government subsidies.
Yemie ADEOYE
INSPITE of the official position of the Nigerian government that the controversial petrol subsidy is gone for good as announced by the President on assumption of office, the state owned Nigerian National Petroleum Corporation Limited, NNPCL has disclosed that petrol subsidy is still fully operational in Nigeria, although, under a different identity.
Umar Ajiya, Chief Financial Officer at the NNPCL, disclosed that it cost the company a staggering N7.8 trillion (US$4.9) to cover this price gap in the first seven months of 2024.
Rather than simply referring to these claims as subsidies, he stated that the company is merely managing the price difference in petrol imports on behalf of the federation, stressing that this should not be misconstrued as a return to subsidy payments.
This revelation has reignited discussions on whether the NNPC is indirectly offering subsidies, a concept typically defined as selling a product below its cost price.
Documents reviewed by Biztellers.com.ng showed that the term “subsidy” was used extensively in official correspondence between the NNPCL and the presidency, particularly in reference to the “shortfall.”
Recall that President Bola Tinubu reportedly approved NNPC’s request to utilize the 2023 final dividends due to the federation to offset these costs.
However, during a media briefing on Monday about the company’s 2023 audited financial statements, Ajiya refuted claims that the NNPC is involved in any subsidy scheme.
Ajiya further disclosed that the Nigerian government owes the NNPC N7.8 trillion ($4.9 billion) in subsidy-related debts for the period from January to July 2024.
In furtherance of his clarification to the News Agency of Nigeria (NAN), Ajiya insisted that no subsidy payments have been made to any marketer in the last nine years, citing the NNPC’s role as the sole importer of petrol under supply contracts.
He said, “In the last eight to nine years, NNPC Ltd. has not paid anyone a dime as a subsidy; no kobo has been disbursed by NNPC Ltd. in the name of subsidy. No marketer has received any payment from us for subsidy.”
“What has been happening is that we have been importing PMS, which has been landing at a specific cost price, and the government tells us to sell it at half price. So the difference between the landing price and that half price is a shortfall.
“And the deal is between the Federation and NNPC Ltd., to reconcile, sometimes they give us money, so there is no money exchanging hands with any marketer in the name of subsidy.”
Ajiya remained silent on how much of the $4.9 billion could have been remitted to the federation account if the NNPC had not been covering the “shortfall.”
It was however noted by Biztellers.com.ng, that although subsidy is back in effect, the main reason for that is the increasingly weak state of the Naira and the country’s extreme dependence on products importation. Also unlike the previous subsidy era, where several oil marketers were getting free subsidy refunds for unverified product importation, this subsidy era is witnessing only one importer, the NNPCL, which in effect is the sole receiver of government subsidies.
The Central Bank of Nigeria (CBN) has refuted claims of devaluing the.
Earlier reports suggested that the CBN had devalued the Naira, lowering its exchange rate from N631 to the dollar, compared to the previous day’s rate of N461.60 at the Importers and Exporters (I&E) window.
However, the Central Bank of Nigeria (CBN) released a statement on Thursday through its Acting Head of Corporate Communications, Dr. Isa Abdulmumin, categorizing the report as false information.
In the statement titled ‘CBN Has Not Devalued The Naira’, he said the attention of the apex bank was drawn to the news report by an Abuja based newspaper edition of June 1, 2023, titled “CB Devalues Naira To 630/51”.
However, the CBN stated categorically that the news report was replete with outright FALSEHOODS and destabilizing innuendos, ‘reflecting potentially willful ignorance of the said medium as to the workings of the Nigerian Foreign Exchange Market.’
“For the avoidance of doubt, the exchange rate at the Investors’ & Exporters (I&E) window traded this morning (June 1, 2023) at N465/USS1 and has been stable around this rate for a while.
“The public is hereby advised to ignore the news report by Daily Trust in its entirety, as it is speculative and calculated at causing panic in the market,” the CBN spokesman added.
He, therefore, advised media practitioners to verify their facts from the Central Bank of Nigeria before publishing in order not to misinform the public.
The interest rate in Nigeria has been raised to 18.5 percent, up by 0.5 percent, from 18 percent where it was pegged in March 2023.
The Central Banks of Nigeria’s (CBN) Monetary Policy Committee (MPC) resolved to this effect at its third meeting of 2023 in Abuja, on Wednesday.
Governor, CBN, Godwin Emefiele, made the disclosure in the communiqué of the MPC’s meeting, thereafter.
While engaging the media at the end of the two-day meeting, Emefiele, said the committee voted to keep the asymmetric corridor at +100 and -700 basis points around the MPR.
In the view of the MPC, rising inflation rate is traceable to the high energy cost and challenges around the supply chain, among others, which lie outside the corridors of the CBN.
Emefiele said, “The current trend in price development would continue to be monitored by the bank with greater collaboration with fiscal authority to address the drivers of inflation.”
Biztellers reports that the CBN had effected six consecutive interest rate increases, which has seen the rate move from 11.5 percent in March 2022 to 18.5 percent in May 2023.
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