CBN Governor Godwin Emefiele yesterday defended the foreign exchange policies instituted by his regime. The apex bank, had in June 2015 issued a circular banning 41 goods and services that were hitherto imported, from accessing the official foreign exchange market.
We are delighted we put forex restriction on 41 items. We were castigated and I was reading in the Economist magazine that what we did was to just move around the home and pick items including toothpicks. I think it is important to know what we are doing. Today, companies that require starch and glucose for their pharmaceuticals and formulations patronise Nigerians. This has created jobs for us.
Emefiele made the remarks while receiving the Best of Africa achievement award conferred on him by Forbes Magazine in Washington DC.
The policies have had mixed success
While the CBN policies have profited some sub-sectors in the agricultural space such as oil palm production, rice production has had mixed success. Nigeria is producing more rice than ever, but domestic rice continues to be more expensive than imported rice. This has led to an increase in smuggling of rice through the nation’s porous land borders. What happens when the apex bank pulls the plug on cheap finance?
Enhanced finance is thus not the only factor necessary for successful industrialization. Nigerian businesses still struggle with infrastructural challenges, which make goods and services produced in the country more expensive than those imported.
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The CBN in some ways is punching above its weight, due to the failure of the government’s fiscal policy. Recurrent expenditure still takes a greater chunk of the budget, and capital expenditure is being rolled forward to next year. Oil still remains a key driver of the Nigerian economy, and the slim recovery from recession was majorly due to a recovery in oil production and crude oil prices. Despite the much touted FX reforms, unemployment has crept to an all time high, showing the reforms have had a minute impact on the larger economy as a whole.