Nigerian Politics

CBN forex ban: Nigerians imported N18tn cooking oil, meat, others in seven years – Report

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CBN forex ban: Nigerians imported N18tn cooking oil, meat, others in seven years – Report

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•Importers ordered agric, animal products, others from Asian, EU, African countries
•Firms sourced dollars at parallel market over CBN forex ban on 41 items

Nigerians imported not less than nine items worth N18.12tn from the forex ban list of the Central Bank of Nigeria between 2016 and 2022, findings by The PUNCH have shown.

The CBN had categorised about 41 import items as not valid for forex, which means that the importer will not be able to get forex from the apex bank for such items.

The apex bank said the restriction was part of efforts to sustain the stability of the foreign exchange market, ensure effective utilisation of foreign exchange and the derivation of optimum benefit from goods and services imported into the country.

However, these items were not banned or prohibited by the Nigerian Customs Service, so they can still be imported.

According to an analysis of Nigerian Foreign Trade reports of the National Bureau of Statistics from 2016 to 2022, items such as crude palm oil, vegetable products, animal products, meat, vegetable fats and oil, steel products, rubber, plastic, clothes, and textiles were imported from various countries.

Further breakdown showed that crude palm oil got a total of N283.8bn in seven years, with N39.5bn spent in 2017, N20.2bn in 2018, N19.1bn in 2019, N134.8bn in 2021 and N70.2bn in 2022. The item didn’t record any transactions in 2016 and 2020.

Vegetable products got N4.8tn with N283.2bn spent in 2016, N295.8bn in 2017, N407.6bn in 2018, N443bn in 2019, N1.1tn in 2020, N945.4bn in 2021, and N1.3tn in 2022.

Animal products recorded trade of N3.3trn with N664.3bn imported in 2016, N190.9bn in 2017, N365.3bn in 2018, N221bn in 2019, N793.5bn in 2020, N485.8bn in 2021 and N549.6bn in 2022.

Mackerel meat recorded a total of N491bn with N11.2bn in 2016, N27.5bn in 2017, N239.5bn in 2018, N37.92bn in 2019, N62.73bn in 2020, N95.3bn in 2021, and N17.1bn in 2022.

Other items restricted from accessing FX at the CBN official market include blue whiting’s frozen meat, which recorded a total of N204bn with N10.5bn worth of goods imported in 2017, N15.2bn in 2018, N21.86bn in 2019, N49.6bn in 2020, N65.5bn in 2021 and 41.5bn in 2022. The product, however, didn’t record any purchases in 2016.

Imported vegetable fats and oil goods got a total of N2.1trn with N35.5bn spent in 2016, N954.4bn in 2017, N72.9bn in 2018, N62.1bn in 2019, N482.3bn in 2020, N292.6bn in 2021 and N165.9bn in 2022.

Others, like steel products, other types of fish and clothes, recorded single transactions in 2017, 2020 and 2021 with N31.9bn, N24.6bn and N62.75bn, respectively.

N5.15tn was spent on rubber and plastic, while N1.67tn was spent on textiles.

The data showed that the sum of N336.47bn was spent on importing rubbers and plastic in 2016, while N79.9bn was spent on importing textiles in the same period.

The figures from the NBS also revealed that in 2017, N405.47bn was spent on rubber and plastics imports. Similarly, N102.62bn was spent on importing textiles in the same year.

Plastic products

According to data obtained from NBS, in 2018 alone, N607.4bn was spent on rubber and plastic imports, while N166.24bn was spent on textile imports.

The breakdown of the data revealed that in 2019, the sum of N536.77bn was spent on importing rubber and plastic, while the sum of N174.97bn was spent on importing textiles within this same year.

In 2020, a total of N1.46tn was spent on importing rubber and plastic, which is N25.6bn more than the amount spent in 2021. Meanwhile, N416.71bn was spent on textile imports in the same year.

The NBS also revealed that N367.68bn was spent on importing textiles in 2021, while N1.19tn was spent on rubber and plastic in the same year.

By 2022, N482.06bn was spent on importing rubber and plastic, while N365.46bn was spent on importing textiles.

A country-by-country breakdown showed that most products were imported from Europe and Asian countries.

However, available data didn’t specify the importing country for animal products, vegetable products, clothes, and other types of fish and vegetable fats and oil.

For crude palm oil, the analysis showed that Malaysia is majorly where the product is sourced with N129.7bn of the product imported during the period.

This is followed by India with N64.5bn, China with N24bn, Ivory Coast with N22.4bn of the product, Singapore with N20.8bn, Indonesia with N17.5bn, Columbia with N1.4bn and Ghana with N114m.

Mackerel products were obtained from the Netherlands at N53.6bn followed by Russia at N72bn, Japan at N43.9bn, Mauritania at N17.1bn, Ireland at N14.75, Chile at N13.9bn, Norway at N12.33bn, Faroe Island at N7.5bn, Morocco at N5.75bn and South Korea at N3.18bn.

Also, Blue Whiting’s frozen meat worth N73.95bn was imported from the Netherlands.

This is followed by Russia N67.1bn, Ireland N22.5bn, Faroe Island N20.96bn, Poland N4.53bn, Chile N2.24bn and Norway N1.47bn.

For steel and iron, a single import worth N31.6bn was recorded from Germany.

In the third quarter of 2018, rubber and plastic were majorly imported from France, valued at N867m, followed by Spain at N594m, Lithuania at N588m, the Netherlands at N449m, and Germany at N249m.

China imports

The fourth quarter of 2018 saw textiles as the majorly imported item from China, valued at N5.07bn, followed by South Korea at N2.94bn, the US at N1.99bn, Taiwan at N854m, and Kenya at N598m.

Comparing the data to previous years, it shows that in the second quarter of 2019, textiles were the majorly imported item from China, valued at N7.34bn, followed by South Korea at N1.07bn, the United States of America at N321.93m, Taiwan at N321.93m, and Kenya at N253.25m.

In the second quarter of 2018, rubber and plastics were majorly imported from France, valued at N561m, followed by Lithuania at N445m, Spain at N410m, Italy at N368m, and China at N328m.

According to data released by the NBS, in the second quarter of 2021, Nigeria imported rubbers valued at N368m from China, followed by Luxembourg at N339m, Taiwan at N298m, Italy at N277m, and India at N67.81bn.

In an earlier report by The PUNCH, a renowned political economist, Prof Pat Utomi, explained that the country had a huge appetite for imports because of insufficient domestic production driven by worsening insecurity and stringent government regulations.

He said, “You will notice that Nigeria’s top imports which are food products and motor spirits are things that we should be exporting because we are a food-producing nation and we have oil in abundance. This is scandalous.

“But the reason this is so is simple; firstly, access to farms is problematic. I am in the agriculture value chain business and farmers say to us ‘We can’t supply to you, because we are afraid to go to our farms’. So insecurity contributes significantly to poor farm output. Beyond insecurity, government regulations and policies also hinder production in various sectors.”

Reacting, the National President of the All Farmers Association of Nigeria, Kabir Ibrahim, said that Nigeria had yet to achieve food sufficiency.

“And that is why I always say we are yet to achieve food security; it is work in progress; it is when the import bill is far less than the export bill; that is when you can say that you are self-sufficient in food at least. But when you import so much like the vegetable oil, there is no food sufficiency.

Also speaking, the Chairman, South West zone of AFAN, Dr Femi Oke, said the development was not encouraging to farmers.

“As farmers, we are not happy, we are pained because it is not encouraging. It is surprising to hear that import of food items rose to that amount despite the fact that these commodities are banned.”

However, Ibrahim believes there is a need to commend the CBN for the forex ban on 41 items.

He said, “The forex ban is commendable as it has made us self-sufficient to some extent, especially rice. Every country in the world does it in order to boost competence in a certain area and prohibit some items to excite internal production. If we can produce it, why should we import it? We are approaching self-sufficiency in rice. There are items we have a competitive advantage and it is not economically wise to import them because they are available here. There are other products we currently don’t have competence in and there is nothing wrong if we import products like milk and wheat.”

Yusuf faults list

Reacting, the Director of Centre for Promotion of Private Enterprise, Muda Yusuf, described the forex ban list by the central bank as an “aberration”, explaining that the banned items were legally acknowledged in the nation’s trade policy document.

Yusuf said, “The list itself is creating confusion in our trade policy because it is only fiscal authorities that should determine what you can import and not import. What the CBN has done is unusual, an aberration because the trade policy of any country is documented in its fiscal policy; a trade policy document which will show the tariffs and items under import and export prohibition. That means you can’t import those products.

“When you have that information document by concerned authorities, the CBN now has its own list of items which you can’t officially source foreign exchange so it creates a lot of confusion in the system. What needs to be done is harmonisation and it is not the duty of the apex bank to decide what items to give forex for. That is a trade policy decision.”

He explained that the ban can be considered to be a major factor in the gap between the official exchange rate and the parallel market.

“It is also creating a lot of pressure on the parallel market and is helping to widen the gap between official and parallel exchange markets since that is where the importers get forex from. And that is creating a whole lot of problems for them.”

A financial analyst and Managing Director of Cowry Asset Management, Johnson Chukwu, on his part, advised the government to prioritise local production of goods to reduce the country’s dependence on imports.

Chukwu said, “In the first place if we have a sufficient supply of those products, it would be inadvisable for anyone to import them

“The reason is that once you have enough supply of these products, the prices would go down below what we can import them.”

Speaking with The PUNCH, the President of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture, John Udeagbala, attributed the imports of the items to a shortfall in local production.

He said, “Apart from being the president of NACCIMA, I am in the palm oil trade. I have a vegetable oil refinery. We don’t have enough in the country. My plant cannot event run 24 hours for one week because we don’t have enough raw materials. There is a shortage. If there is no demand, there won’t be any supply.”

Similarly, the Deputy-President of the Lagos Chamber of Commerce and Industry, Gabriel Idahosa, said that local production of some items had decreased over time. This, coupled with Nigeria’s growing population has necessitated imports of products which Nigeria ought to attain self-sufficiency.

He further stated that due to the fortune spent by importers to bring in these imported items, Nigerians would consequently have to pay more for products which ought to have been purchased at cheaper prices.

Idahosa said, “This is why exchange rate has gone from N300 to the dollar, from 2 or 3 years back to N700. This is the impact. Because CBN has banned the items on the list, these people go to the parallel market.

“If somebody is selling imported fish, by the time the fish arrives Apapa, the importer of then fish has calculated all his costs. He will just set his profit margin and take it to the market. If a crate of ice fish was N5000 before, now we buy it at N22,000. It causes runaway inflation and multidimensional poverty.”
(Punch)