Nigeria may lift a ban that is prohibiting the importers of certain goods from accessing foreign currency on the country’s interbank market, Vice-President Yemi Osinbajo said.
The West African nation’s government would consider "policy-driven restrictions" to promote local manufacturing of 41 items such as rice and toothpicks, Osinbajo said in an e-mailed copy of a speech on Tuesday.
Ending the ban could be the latest easing of foreign-currency trading restrictions by the Central Bank of Nigeria after it removed a naira peg in June 2016 and introduced a window for portfolio investors to trade at a market-determined exchange rate in April. While many importers of listed items have sourced foreign currency from the black market at a premium as high as 30%, the central bank defended the policy, saying it encouraged domestic production and conserved foreign reserves.
This is a good development for particularly small manufacturing companies; a number of them had been complaining that the supply of some of the items locally is small, some do not have local supply," Pabina Yinkere, head of institutional business at Lagos-based Vetiva Capital Management, said on Tuesday by phone. Still, Nigeria "does need to spur domestic production", Yinkere said.
In April, the central bank introduced a foreign-exchange window for portfolio investors to trade currency at market-determined rates.
The central bank removed a peg of 197-199 naira against the dollar after more than a year in June, even as it continued with regular interventions to keep the currency from weakening below 315 against the greenback.
Removing currency-trading restrictions was welcome and if the government wanted to regulate certain imports, that "should be controlled by the fiscal authorities with the use of tariffs, rather than monetary policy or forex" measures, Ayodeji Ebo, head of research at Afrinvest West Africa, said by phone from Lagos.
In stabilising the macroeconomic environment, we have focused on aligning fiscal with monetary policy and nudging the central bank towards the objective of more market-determined exchange rates," Osinbajo said.