December 1, 2018

Forex: Defaulters of 41 items will be banned from banking industry — Emefiele

By Babajide Komolafe

Governor, Central Bank of Nigeria, CBN, yesterday said that individuals and organisations found  circumventing the foreign exchange restriction placed on the 41 items will be banned from operating bank accounts in the country.

He disclosed this while delivering the keynote address at the 2018 annual Bankers Dinner of the Chartered Institute of Bankers of Nigeria (CIBN)



He said: “Given the remarkable success that has been achieved in stimulating domestic production of goods such as rice, cassava and maize, as a result of the restrictions placed by the CBN on access to forex   for 41 items,   the CBN intends to vigorously ensure that this policy remains in place, and 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 hard with the EFCC to expose and sanction any, bank, company or Fx operator that colludes with unscrupulous individuals / companies to undermine the policy on 41 items. Such sanctions will include, but not limited to prohibiting the banks from maintaining any bank accounts for such institutions or persons in Nigeria.”


Speaking on the positive impact of the restriction also known as 41 items policy, Emefiele said: “There has been considerable discourse particularly on whether the restriction on access to foreign exchange for 41 items is driving local production, with some nay-sayers stating that it has constrained productivity and growth in the economy.

“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. Any attempt to reverse the course of this actions may have untold consequences on the growth trajectory of our economy particularly in our push to diversify and restructure our economy.

“ 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.

“Second, many entrepreneurs are taking advantage of this policy 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. “Noticeable declines were steadily recorded in our monthly food import bill from $665.4 million in January 2015 to $160.4 million as at October 2018; a cumulative fall of 75.9 percent and an implied savings of over $21 billion on food imports alone over that period. 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 percent 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 vigor until the underlying imbalances within the Nigerian economy have been fully resolved.’

Outlook for 2019

Speaking on outlook for 2019, Emefiele said the apex bank will sustain its tight monetary policy with priority on maintaining stable exchange rate.

He said: “Monetary policy stance will remain judicious, research driven, adequate and supportive of the real economy subject to underlying fundamentals. The current tight stance is 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, 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 percent in quarter two of 2018, growth is projected to quicken to 1.7 percent 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 about 11.4 percent and then moderate thereafter;

“Though the CBN has so far managed to maintain exchange rate stability, the current capital flow reversals from emerging markets is 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”.