Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, has warned companies conniving with unscrupulous individuals to contravene the apex bank’s 41 items forex restriction to immediately desist.
According to the CBN boss, refusal to heed this warning would necessitate repercussions, including threats to such defaulting company’s continued chances of doing business in Nigeria.
Emefiele, WHO issued this warning while speaking during the recently held 53rd annual bankers’ dinner as organised by the Chartered Institute of Bankers of Nigeria, CIBN, went further to state that one of the punishments for defaulters will come in the form of restrictions placed on their accounts with the CBN.
He also revealed that the CBN is working in partnership with the Economic and Financial Crimes Commission (EFCC) to commensurately punish defaulters.
“The CBN’s economic intelligence and banking supervision department will work very closely with the EFCC to expose and sanction any bank or company whose directors or FX operator colluded with unscrupulous individuals or companies to undermine the policy on 41 items.
“Such sanction will include but not limited to prohibiting the banks from maintaining bank account for such institution or person in Nigeria.” -Emefiele
What are these restricted items?
The 41 items banned by the CBN range from consumer goods like rice to industrial goods like cement. As we analysed back in 2015 when the restrictions were imposed, the decision was part of CBN’s desperate measures to control Nigerians’ demand for hard currency dollar at a time when recession was hitting hard and the economy was struggling.
Emefiele believes this measure has yielded results by encouraging local production and stimulating economic growth; hence the need to sustain it.
He further reiterated the CBN’s commitment towards ensuring that local production of goods and services are intensified in the country.
“Based on our internal research conducted by the Central Bank of Nigeria, there is strong evidence that the recovery from recession may have been much weaker, even negative without the implementation of the restriction on the 41 items.”
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Why is the dollar very strong against the Naira despite all these restrictions. Now this was to encourage local production of these good, hence less pressure on the dollar. Simple economics is that once demand for any commodity is low, the price of such commodity will be reduced drastically.
No need to sound any warning. Go ahead and sanction any offender caught. With that, sanity will come in.
It depend on how you sees the dollar against other currencies,which are convertible in international forex market.in international currencies which are convertible,the pound is strong against the dollar,against the euro.
With the naira against the dollar is more complex.the dollar is not strong against the naira,for one the dollar is used by about 60 % of other countries,while the naira is not convertible in international market,secondly the naira do not any support in Nigerian forex money market ,thirdly the CBN have not pursued a naira convertible in international forex market,forthly the next question is about demand and supply.in about 10 yrs from now,it is possible for the 10 naira to about 3 naira to 1 dollar,the Nigerian economy is not balanced structurally