The World Bank has advised the Central Bank of Nigeria to end its forex restriction policy on 41 items. This, it said, would complement moves to reduce inflation through a sequenced and coordinated mix of monetary, fiscal and trade plans.
It said this in its latest report titled ‘Nigeria Development Update (June 2023): Seizing the opportunity’.
The CBN had categorised about 41 import items as not valid for forex, which means the importers of such items will not be able to get forex from the official window for such items.
However, these items were not banned or prohibited by the Nigerian Customs Service, so they can be imported. An earlier analysis by PUNCH showed nine items worth N18.12tn were imported between 2016 and 2022.
According to the global bank, the current restrictive trade policy negatively impacts poverty, revenue and domestic competitiveness, while the import ban is driving up the cost of living.
As a solution, the bank recommended the replacement of import restrictions with tariffs that reflect the Economic Community of West African States Common External Tariff.
It stated,” The current restrictive trade policy in Nigeria has a negative impact on poverty, revenue and domestic competitiveness. The current import ban of staple foods drives up the cost of living, while FX restrictions on imports harm Nigerian firms’ competitiveness, increase inflation and poverty and reduce customs revenue.
“Remove the 43 items from the list of FX restrictions and replace import restrictions with tariffs that reflect the Economic Community of West African States Common External Tariff.”
The Bretton Woods institution added that applying tariffs that reflect the common ECOWAS tariff and replacing FX restrictions with tariffs would increase the revenues these generate and lower consumer goods’ and intermediate production inputs’ prices.
Economists had called for the abolition of the policy although the CBN maintained that the policy was aimed at protecting the local market.
In April, the Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, advised the current administration to reform the tariff regime and reset its trade policies.
He urged the government to put an end to having two parallel trade policies and make Nigeria’s international trade ecosystem technology-driven.