Nairametrics| The Central Bank of Nigeria has issued a press release clarifying interpretations that it had reversed the ban on 41 items. Nairametrics had on Thursday interpreted the circular as a lifting of the ban on 41 items. The 41 items, according to the CBN, remains banned from accessing foreign exchange on the official forex market.
The CBN had on Thursday, issued a new circular (which is still not visible in its website) titled REVISED DOCUMENTATION REQUIREMENT FOR ALLOCATION OF FOREIGN EXCHANGE OF FOREIGN EXCHANGE FOR SMALL – SCALE IMPORTATION. However, the apparent confusion was in the final paragraph of the circular where it mentioned that items not valid for forex, shall now qualify for forex allocation, subject to a limit of $20,000 and provided a Form Q is completed.
“Please note that importers of items classified as “Not Valid For Forex” with transaction value of $20,000 and below per quarter shall now qualify for allocation of foreign exchange subject to completion of Form Q”
The CBN in a subsequent press release on Friday, published in its website, clarified the misinterpretation of the circular issued on Thursday. It explained that it was a “misinterpretation” of the circular” to the effect that importers of items” classified as “ineligible for Forex” with transactions value of $20,000 and below per quarter shall now qualify for allocation of foreign exchange subject to the completion of Form Q.
It then went on to assert that the provision DOES NOT REFER TO THE 41 ITEMS THAT REMAIN INELIGIBLE FOR FOREX SALE in the Nigerian Forex market.
Why the confusion?
Back in 2015 when the CBN issued its circular on the 41 banned items, it had titled the circular as follows; INCLUSION OF SOME IMPORTED ITEMS ON THE LIST OF ITEMS NOT VALID FOR FOREIGN EXCHANGE IN THE NIGERIAN FOREIGN EXCHANGE MARKET.
Without listing or mentioning the items previously not valid for forex and now qualifying for forex as contained in its circular dated May 3rd 2017, it left most analysts without a choice but to interpreted the circular as all previously banned items including the 41 banned in 2015.
By using the term “Not Valid For Foreign Exchange” the CBN inadvertently alluded to all items that may have been hitherto banned from accessing the forex market.
Observers of CBN’s circular issuance over the years also suggest the circular may have been a gaffe and that this is not the first time they have had to clarify circulars that include semantics thus leaving room to varying interpretation.
The CBN still did not provide a list of imported items now eligible for forex subject to the limit of $20,000 as mentioned in its May 3rd circular. It appears thus that the May 3rd circular now refers to “small scale importation” that at least excludes the 41 banned items.
To refresh our readers, these are the key details of the May 3rd circular.
- Importers of the items that were previously banned, will now be allocated $20,000 a quarter.
- The importers will be required to provide Form Q.
- Applicants for the foreign exchange would be required to have been account holders for at least six months.
- Foreign account bank transfer details will be provided along with an invoice.
Below is a copy of the circular.