Abuja - Nigeria
may lift a ban that’s 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 will consider
“policy-driven restrictions” to promote local manufacturing of 41 items such as
rice and toothpicks, Osinbajo said in an emailed 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 and introduced a window for portfolio investors
to trade at a market-determined exchange rate last month.
While many importers of listed items have sourced foreign
currency from the black market at a premium as high as 30 percent, the central
bank defended the policy, saying it encourages domestic production and
conserves foreign reserves.
Read also: Nigeria central bank to sell $150 million
“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 Tuesday by phone. Still, Nigeria “does need to spur domestic
production,” Yinkere said.
Market Rates
Last month, 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 per 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 is welcome and if the
government wants to regulate certain imports that “should be controlled by the
fiscal authorities with the use of tariffs, rather than monetary policy or FX”
measures, Ayodeji Ebo, head of research at Afrinvest West Africa Ltd. said by
phone from Lagos.
“In stabilizing the macroeconomic environment, we have
focused on aligning fiscal with monetary policy and nudging the central bank
toward the objective of more market-determined exchange rates,” Osinbajo said.
BLOOMBERG