The Federal Government of 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.
In a speech given on Tuesday, he said the government will consider “policy-driven restrictions” to promote the local manufacturing of 41 items such as rice and toothpicks, Bloomberg reports.
The lifting of the ban could be the latest foreign-currency trading restriction that the Central Bank of Nigeria will ease after it removed a currency peg in June 2016 and introduced a window for portfolio investors to trade at a market-determined exchange rate last month.
However, while this has come at a price, with increased number of importers sourcing foreign-currency from the black market at a premium as high as 30 percent, the central bank has defended the policy, saying it is encouraging domestic production and conserving 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 Tuesday by phone. Still, Nigeria “do need to spur domestic production.”
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 197-199 naira to dollar currency peg that was in place for more than a year in June, even though it continued with regular interventions to keep the naira from falling below 315 against the greenback.
“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.