CBN governor says Nigeria lost as much as $1.4bn due to the import ban on 43 products

CENTRAL Bank of Nigeria (CBN) governor Olayemi Cardoso has revealed that Nigeria lost a total of $1.4bn over the last eight years due to the federal government's import ban on 43 items which made it illegal to bring them into the country.


Speaking at the 58th Annual Bankers’ Dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN) on Friday, Mr Cardosi said the 43 items were never explicitly prohibited from importation or sale in Nigeria. He, however, explained that the CBN had implemented restrictions on accessing foreign exchange for the importation of these items.


Mr Cardoso emphasised that the issue of trade policy, specifically the importation and sale of the 43 items, was primarily within the domain of the fiscal authorities, not the CBN. This distinction, he said, was important because it clarifies that the CBN’s decision to lift the foreign exchange restrictions on these items was not intended to encroach upon the responsibilities of other government agencies.


In June 2015, the CBN published a list of imported goods and services that will not be eligible for foreign exchange in the Nigerian. This list which was originally 41 was updated to include two more items and on October 12 2023, the CBN announced that it had lifted the ban on the issuance of foreign exchange for the importation of rice, vegetable oil and poultry products among other 43 items.


Mr Cardoso said: “Allow me to provide further clarification on the issue of the 43 items. Firstly, it is important to note that these items were never outrightly banned by the government but the CBN had imposed restrictions on their access to foreign exchange in the official market.


“However, these restrictions resulted in increased demand for foreign exchange in the parallel market, leading to the depreciation of the exchange rate in that segment of the Nigerian Foreign Exchange Market and widening the premium between the parallel and official market.’’


He added that studies had shown that during the period when the 43 items were restricted, there was a 51% increase in trade evasion by importers accessing the foreign exchange market. According to him, this resulted in a revenue drop of approximately $1.4bn, or $275m annually, between 2015 and 2019.


Mr Cardoso added that revenue from tariffs on goods decreased from a high of approximately $920m in 2011 to about $250m in 2017. He pointed out that evidence had shown that foreign exchange restrictions had an adverse impact on Nigerian households and contributed to inflationary pressures.


“In 2019, the actual tariff on goods stood at $320m but counterfactual evidence suggests that as much as $680m could have been earned in the same year,” he said. Mr Cardoso said the reduction in trade restrictions and levies on rice, sugar and wheat by 50%  had only a minimal impact on welfare, with a 0.8% improvement and a mere 0.4% reduction in extreme poverty.


Furthermore, Mr Cardoso explained that the benefits of trade gains for the general population were negligible, as the average industry in Nigeria pays 13.7% more for its inputs. He added that the CBN will boost liquidity in the Nigerian foreign exchange market by intervening from time to time but stressed that these interventions will decrease as liquidity improves.