Manufacturer’s in the country have one less thing to worry about as the Central Bank of Nigeria CBN has reinstated 36 raw materials that were removed from the official foreign exchange window in May 2015.
President of the Manufacturers Association of Nigeria (MAN) Frank Udemba-Jacobs disclosed this in a parley with the media. The items in question however, are specific components from the originally banned items.
Why the CBN modified the banned list
According to Udemba-Jacobs, the CBN made the decision following a presentation made by the association. MAN had stated that the raw materials in question could not be manufactured in the country.
“The 41 items translated to 680 ‘HS codes’ (harmonised System) with only 95 of them as raw materials. The CBN through our interventions has removed 36 from the 95.”
HS Codes are used by the World Customs organization to classify goods that can be traded by member countries.
The apex bank had in May 2015 banned 41 items from the official foreign exchange market in a bid to manage the country’s foreign exchange reserves.
Other likely reasons for the move
Nigeria’s foreign exchange reserves have bounced back, driven by the resurgence in both crude oil prices and production volumes. Recent data from the CBN website shows reserves have hit $40 billion, the highest in almost 2 years. Crude oil prices have moved from a low of nearly $40 a barrel, to $70. Crude oil production in the country has also hit close to a million barrels per day, due to relative peace in the Niger Delta.
How do manufacturers benefit from this ?
Industries making use of this raw materials, accessing the official foreign exchange market results in significant cost savings. Manufacurers were badly hit by the recent foreign exchange crisis in the country. While multinationals were able to access foreign currency loans from their parent companies, indigenous manufacturers were left stranded.