Sanctions await banks, their customers and businesses that abuse the Central Bank of Nigeria’s (CBN’s) policy restricting foreign exchange (forex) allocation to 41 items.
Culprits are to be investigated and sanctioned, the apex bank said yesterday through its Director, Financial Policy & Regulation Department, Kelvin Amugo.
The investigation will be carried out by the Economic Intelligence Unit of the CBN in collaboration with the Economic and Financial Crimes Commission (EFCC), Amugo said in a letter to all banks.
As part of its developmental objective on employment generation and inclusive growth, the CBN had on July 1, 2015, stopped foreign exchange allocation to the importation of 41 items, which could be produced locally.
The bank said that the policy had been abused by some banks and their customers.
According to the trade information available to the CBN, the policy is being abused as the restricted items are being dumped in the country.
Such sanctions will, among others, include blacklisting the institutions and their directors; closing of their accounts; and restricting them from maintaining accounts in any bank under the can remit. Banks that provide their platforms for such economic abuses are to be sanctioned.
The letter reads: “The CBN views this development with trepidation. The Economic Intelligence Unit of the CBN in collaboration with the Economic and Financial Crimes Commission (EFCC) would commence immediate investigation of the accounts of the corporates and entities engaged in this unwholesome act with a view to visiting severe sanctions on all the culprits.”
According to the apex bank, the implementation of the policy has resulted in massive investment and the establishment of cottage industries that now engage in the production of the restricted items across the country. The growth and development benefits have been phenomenal.
It said: “Unfortunately, the trade information available to the CBN indicates the circumvention of the policy as the restricted items are being dumped in the country. The implications are that the growth and employment benefits arising from the policy may be eroded if not checked.
“Banks are by this notice, advised on strict compliance with the Know Your Customers (KYC) and Know Your Customer Business (KYCB) requirements and be properly guided.”
CBN Governor Godwin Emefiele had at the 53rd annual Bankers dinner in Lagos, said the CBN’s policy restricting forex access to 41 items that can be produced locally has helped to move the economy out of recession adding that there even calls that the list of 41 items be increased to cover more goods that can be produced locally.
Emefiele said: “As I have always emphasised, it is our collective duty to ensure that the potentials and prospects of the Nigerian economy is optimally realised.
“The ongoing economic recovery requires the joint efforts and wise counsel of everyone, if we must make giant strides forward. The CBN is more determined now than ever to remain at the forefront of the effort to ensure that the rebound is not overturned.
“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.”
In a separate circular by Director, Trade and Exchange Department, Ahmed Umar, the CBN said: “In the continued effort to sustain the achievement recorded from the classification of 41 import items as ‘Not Valid for Foreign Exchange’ in the Nigerian Foreign Exchange market, authorised dealers and the general public are hereby notified of the inclusion of fertilizer on the list effective Friday December 7, 2018.
“However, the CBN will ensure that transactions (Form ‘M’) on fertilizer for which payments are outstanding are settled at the appropriate settlement dates.”