Nigerian Import Expenditure Surges as CBN Lifts Forex Ban on 43 Items

In the fourth quarter of 2023, Nigerian import expenditure on seven previously restricted items surged to N1.39 trillion, indicating a substantial increase from the N2.14 trillion spent on 43 items in 2022. This surge represents a 100% rise from the N2.15 trillion recorded in 2023, as citizens imported goods worth N4.29 trillion. Initially, the Central Bank of Nigeria (CBN) had designated 41 items ineligible for forex, forcing importers to resort to the black market, thus pressuring the naira.

Although these items were not banned by the Nigerian Customs Service, their importation contributed to forex market instability. However, in October, the CBN lifted the ban on importers of 43 items, allowing them to purchase foreign exchange in the Nigerian forex market. This decision led to a significant uptick, with imported goods increasing from N1.29 trillion in the third quarter of 2023 to N1.39 trillion.

The World Bank, in its December 2023 Nigeria Development Update report, projected that lifting import restrictions would lift approximately 1.3 million people out of poverty by lowering affected item prices by 4.7%, thereby enhancing purchasing power.

An analysis of the latest Nigerian Foreign Trade reports by the National Bureau of Statistics revealed imports of various items such as crude palm oil, vegetable products, animal products, meat, vegetable fats and oils, rubber and plastics, and textiles from diverse countries.

Responding to the situation, Muda Yusuf, the Director of the Centre for Promotion of Private Enterprise, criticized the CBN’s forex ban list, labeling it an “aberration” as the banned items were legally recognized in the nation’s trade policy document. Yusuf emphasized the need for harmonization and asserted that the ban exacerbated the gap between the official and parallel exchange markets, urging the government to prioritize local production to reduce import dependence.

Financial analyst Johnson Chukwu echoed this sentiment, advocating for a shift towards local production to diminish import reliance.

Meanwhile, the Senate cautioned against increasing the budget size through a supplementary budget, suggesting that excess savings from the recent naira depreciation should fund the deficit instead.

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