By Tony Obiechina, ABUJA
The Governor of the Central Bank of Nigeria, (CBN) Mr Godwin Emefiele on Tuesday disclosed that the bank would increase the number of items placed on import restrictions from 42 to 50.
The governor who disclosed this at the end of the meeting of CBN’s Monetary Policy Committee (MPC) in Abuja warned that, the Economic Intelligence Department of the Bank in collaboration with the Economic and Financial Crimes Commission (EFCC) would henceforth investigate any company or individuals suspected of bringing these items through smuggling or any means for money laundering and economic sabotage.
Addressing journalists at CBN headquarters, Emefiele said ‘if we discover and conclusively that these companies or individuals that are involved in bringing these goods, we would write to all the banks that they should blacklist all those companies and individuals running those companies; that they can no longer operate any bank accounts in any Nigerian bank. We don’t need to talk about prosecuting them but just to say we will not allow you to do business in Nigeria and of course you know the implications of that”.
“What I said is that CBN will get even more aggressive to see to it that any or all food items that can be produced in Nigeria and consumed in Nigeria and are currently being imported into Nigeria that we would go through our records and once we convince ourselves that these products can be produced in Nigeria, we will place them on the FX restriction list.
“It means that you cannot source foreign exchange from Nigeria foreign exchange market to import those items into Nigeria. If you have free dollars, you can bring it in but you will not be able to even make payments for those goods with dollars from the Nigerian foreign exchange market. This is because we think that the initiatives that CBN has put in place in the past to cut imports and diversify the structure of the Nigerian economy is yielding results and we will continue to be that aggressive”, he noted.
On assessment of the economy the Governor said, ” it is important for me to say that if we think about where we are coming from, I would say, I like to use some numbers: for instance, in September 2008, Nigeria’s reserve was about $62 billion. GDP was 7.2 percent; inflation was 15 percent.
“By January 2014, GDP was 6.2 percent, inflation had trended downwards to 8 percent and external reserve was 40 percent. Let us not forget that we were in a period of prosperity, in terms of crude prices between 2009 and 2014 which is five straight years, with no shut-ins in pipelines, with high crude oil price, reserve still dropped.
“From the end of 2014, we started another round of global crises. The global crises resulted in… in Nigeria. GDP dropped, to 2.79 percent in 2015, went further and contracted to negative of 1.58 percent in 2016, improved in 2017 to …and then we are hopeful that 2018 would end at about 1.8 percent.
“Inflation was 15 percent in 2008, dropped to 8 percent in 2014 and it moved up to about 9.5 percent and by January 2017, it has moved up to 18.7 percent but today, through the activities of monetary and fiscal authorities, inflation had gone down to 11.4 percent.
“By 2008, with higher reserves, with higher productivity reserves dropped to $40 billion in January 2014 anmd ended 2014 at $35 billion, went further down in 2015 to $28 billion and indeed by October 2016 as a result of economic crises, reserves had plummeted further to $23 billion.
Today as a result of all the actions and activities of both the monetary and fiscal authorities supported by the government, reserve is up, went to $39 billion in 2017 and 2018 we closed at $42.5 and I said so in my communique that even as at now, as a result of the confidence in the management of the Nigerian foreign exchange, the confidence in the management of the country, we’ve seen confidence even in foreign investors returning, reserves as at yesterday was $43.28 billion.
“We have seen FX stability in the market and as if all of you will recall, that sometime in 2016 and up to early 2017, we saw a situation where exchange rate even in the black market had moved up in February to N525/$ and I was being told that by March, it will hit N1000/$. But as a result of the actions of CBN today, the all marketers in fact BDC has come down to about N360/$ and even slightly lower.
“The I&E Window, which is a market that we set up as a free in-free-out market today is about N362/$. So we have seen a substantial convergence in the foreign exchange market in Nigeria”, Emefiele pointed out.
On the $43.281 billion external reserves, the Governor said forecasts for key macro-economic variables in 2019 portend a positive outlook for the domestic economy.
“This is expected to be driven by fiscal stimulus from increase in oil and non-oil receipts to support the Federal Government’s ERPG plans. The economy is projected to grow by two percent by IMF and 2.2 percent by the World Bank and 2.28 percent by CBN.
“Key headwinds to these forecasts however, are softening of oil prices, persistent security challenges arising from insurgency in North East and herdsmen attacks in some parts of the country and perceived political risks associated with 2019 general elections”, he added.
According to him, the MPC was of the view that oil prices may however, remain relatively stable within $50/barrel bracket in view of recent OPEC production cutting actions.
“The Committee noted with satisfaction the performance of the economy in 2018, highlighting the achievements in key macroeconomic indicators in the face of global uncertainties and domestic challenges.
In particular, it noted the stability in the exchange rate, stable accretion to external reserves, moderation in inflation and gradual improvement in output growth.
“The MPC further noted the low but gradual improvement in the last six consecutive quarters commencing from the second quarter of 2017.
MPC noted that given global economic conditions, the risks confronting emerging markets and developing economies, in recent times as well as the productive capacity of the economy, managed float regime management of the central bank have delivered the most optimum results when compared to other emerging markets in recent times.
“Consequently, capital flows into the domestic economy has continued unabated after an initial lull. The Committee considered the risk to the growth of the economy noting downward revision in the projected global output in 2019, the adverse impact of the trade wars between United States and its major trading partners, the likelihood of lower crude oil prices, impact on capital flows of continuing monetary policy normalization by major advanced economies, distorted signals of Brexit negotiations as well as pockets of other socio-political tensions and perceived election risks on the domestic front”.
On external borrowing, Emefiele said the committee noted the increase in debt levels, advising for caution, as it could fast be approaching the pre-2005 Paris Club exit levels.
“MPC also noted that although there was an increase in inflation rate for the second consecutive month based on month on month, inflation continued to moderate indicating that the year on year measures will also moderate in the near term.
Tighten may force banks to reprice assets thus increasing the cost of credit thus elevating credit risks in the economy.
It will also worsen the position of non-performing loans of the banks.
Again, tightening would dampen investments and hamper the improvements in output growth given the current fragile growth performance so far achieved.
All 11 members therefore voted to keep the policy parameters unchanged from their current levels”, he added.
