Emefiele: Nigeria’s Monthly Import Bill Drops from $665.4m to $160.4m    Promises to sustain stability in the forex market 

By Obinna Chima

The Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, yesterday revealed that the various initiatives aimed at encouraging domestic production, have resulted in Nigeria’s monthly import bill falling significantly from $665.4 million in January 2015, to $160.4 million as at October 2018, representing a drop by 75.9 per cent and an implied savings of over US$21 billion on food imports alone over that period.

 He disclosed this in a keynote address he delivered at the 53rd Annual Bankers’ Dinner of the Chartered Institute of Bankers (CIBN) held in Lagos.

According to him, many entrepreneurs are now taking advantage of policies aimed at ramping local production to venture into the domestic production of the restricted items with remarkable successes and great positive impact on employment.

“The dramatic decline in our import bill and the increase in domestic production of these items attest to the efficacy of this policy.

“Most evident were the 97.3 percent cumulative reduction in monthly rice import bills, 99.6 percent in fish, 81.3 percent in milk, 63.7 per cent in sugar, and 60.5 percent in wheat.

“We are glad with the accomplishments recorded so far. Accordingly, this policy is expected to continue with vigour until the underlying imbalances within the Nigerian economy have been fully resolved.

“If we continue to support the growth of small holder farmers, as well as help to revive palm oil refineries, rice mills, cassava and tomato processing factories, you can only imagine the amount of wealth and jobs that will be created in the country.

“These could include new set of small holders farmers that will be engaged in productive activities; new logistics companies that will transport raw materials to factories, and finished goods to the market; new storage centres that will be built to store locally produced goods; additional growth for our banks and financial institutions as they will be able to provide financial services to support these new businesses; and finally, the millions of Nigerians that will be employed in factories to support processing of goods.

“If we turn a blind eye to the opportunities that are being created as a result of our policy on 41 items, we will be spelling doom for our nation. We can no longer afford to depend solely on imports given the size of our population, and the need to create jobs for our people.”

The CBN governor also stated that the bank would be collaborating with the Economic and Financial Crimes Commission (EFCC) to expose banks, importers or organisations that collude with corrupt individuals to flout its policy on the restriction of foreign exchange (forex) to 41 items.

The CBN had in July 2015, restricted 41 items, including vegetable oil, poultry products, toothpicks, cosmetics, plastic and rubber products, among others, from accessing foreign exchange from the interbank foreign exchange market.

Importers of the restricted items were asked to source their forex requirements from autonomous sources.

Emefiele pointed out that given the remarkable success that had been achieved in stimulating domestic production of goods such as rice, cassava and maize, as a result of the restrictions placed on access to forex for the 41 items, the central bank intends to vigorously ensure that the policy remains in place.

He also warned speculators in the forex market that they would lose their shirt, saying the central bank has enough war chest to sustain the stability in the forex market.

According to him, the central bank would continue to take measures to ensure stability in the forex market.

He said additional efforts would be made to block any attempts by unscrupulous parties (both individuals and corporates) that intend to find other avenues of accessing forex, in order to import these items into Nigeria.

“The CBN’s Economic intelligence and Banking Supervision Departments will work very closely with the EFCC to expose and sanction any bank, company and or its directors or forex operator who colludes with unscrupulous individuals/companies to undermine the policy on 41 items.

“Such sanctions will include, but not limited to prohibiting all the banks in Nigeria from maintaining any bank accounts for any such institutions or persons in Nigeria.

“If you are caught as an individual or a company, we are saying that, that bank, that company and the individuals, that the central bank would prohibit all the Nigerian banks at same time, from maintaining any bank account for you,” he warned.

In his outlook for 2019, Emefiele predicted that monetary policy stance would remain judicious, research driven, adequate and supportive of the real economy subject to underlying fundamentals.

He pointed out that the current tight stance was expected to continue in the near-term, especially in view of rising inflation expectations and exchange market pressures.

“Though we will act to appropriately adjust the policy rate in line with unfolding conditions and outlooks, the CBN will continue to ensure that the policy interest rate is delicately set to balance the objectives of price stability with output stabilisation.

“With favourable oil price developments and continued efforts at driving indigenous production in high-impact real sector activities, especially agriculture and manufacturing, Gross Domestic Product (GDP) is expected to pick-up in the remaining two quarters of 2018.

“This will be buoyed by the anticipated budgetary and electioneering spending in the near-term. From 1.5 per cent in quarter two of 2018, growth is projected to quicken to 1.7 per cent in quarter three and 1.9 by the fourth quarter.

“Inflation expectations are rising on the backdrop of anticipated politically-related liquidity injections. For the rest of 2018 and towards mid-2019, Nigeria’s rate of inflation is projected to rise slightly to 11.4 percent and then moderate “Though the CBN has so far managed to maintain exchange rate stability, the current capital flow reversals from emerging markets are expected to continue to exert considerable pressure on market rates.

“This pressure could be amplified by the forthcoming elections, especially as the political market place heats up. Notwithstanding these pressures, the CBN is determined to maintain its stable exchange policy stance over the next few months given the relatively high level of reserves.

“Gross stability is projected in the FX market given increased oil related inflows and contained import bill.

“I will like to make it categorically clear that sustaining a stable exchange rate is of overriding importance to us even as we continue to put measures in place to shore up reserves.”

He pointed out that the country’s overdependence on crude oil for forex revenue also meant that shocks in the oil market would be transmitted entirely to the economy via the forex markets.

“Based on our internal research conducted at the Central Bank of Nigeria, there is strong support that the recovery of our economy from the recession may have been much weaker or even negative, without the implementation of the restriction on 41 items.

“Our research supports the conclusion that the combination of the restriction on 41 items along with other measures imposed by the fiscal and monetary authorities has helped to promote the recovery.

 “In fact, recommendations are being made to the CBN that the list of 41 items be expanded to include other additional items that can be locally produced.”