Isaac Okorafor, acting director of Corporate Communications, Central Bank of Nigeria, explains why the bank will not yield to pressure to float the Naira or unban 41 items from Forex market as it will affect the farmers and the poor negatively

|  By Anayo Ezugwu  |  May 15, 2017 @ 01:00 GMT  |

TWO years after the Central Bank of Nigeria, CBN, blacklisted 41 items from accessing foreign exchange from its official window, the apex bank is under severe pressure to abolish the policy.

But the CBN had said that if it abolishes the the policy it means that the bank would allow importers of those items which could be produced in Nigeria to access forex from the official market again.

At the 2017 Biennial Convention of the Nigerian Guild of Editors, NGE, in Lagos, on Saturday, April 30, Isaac Okoroafor, acting director, corporate communications, CBN, said lifting the ban would be unfair to all the farmers who have left the urban areas to rural areas to farm and those who have invested in agriculture.

“If we abolish this, it means we should allow these people to begin to import those items again and all the farmers who have left the urban areas to rural areas to plant, all the jobs they have created, all the loans they have taken and all the produce they have come up with will rot in their hands. And we believe that it is an act of extreme wickedness to do that to them again,” he said.

According to Okorafor, the restrictions of the 41 items from access to forex have made Nigerians to venture into agriculture and manufacturing again. He said presently there are four Nigerian factories producing toothpick and about eight companies manufacturing industrial starch in the country. “The other leg why we should not abolish the list of 41 items is that when that list was introduced no single factory was producing toothpick in Nigeria. Today, we have four and they are selling. Before all the factories that are producing industrial starch with cassava have folded up. We have eight of them producing now. And Nestle, Nigerian Breweries and Cadbury are all going there to buy industrial starch. There is a factory in Oyo State, it has doubled its productions and tripled the number of out-grower farmers for its cassava, which it uses in the industrial starch production.

 “We have consciously been funding all those firms that produce to fill the gap created by these 41 items. Of course, our success story in Kebbi State on the Anchor Borrower programme and in 21 other states we have put in a total of N33 billion on the production of rice, maize, soya bean, fish and a whole lot of other items. The farmers are borrowing these monies. They are making money and paying back. For the loans we gave earlier, we have now 50 percent repayment.

Citing positive changes the policy brought to the country, Okorafor said that according to Thailand Rice Farmers Associations in 2014, Nigeria imported 1.2 million tonnes of rice from Thailand. “But in 2015 when we introduced Anchor Borrowers programme, Nigeria imported 634,000 tonnes. In 2016, from Thailand, we imported only 58,000 tonnes of rice and the revenue that Thailand farmers were getting from us in dollars decline by 91 percent. Now I ask you where does that revenue go to? Some of it went to Nigerian farmers. I want to say that we are in this because of our collective failure to diversify the economy over the years. Once we get into crisis, we all cringle but once a solution comes as we are getting out of the crisis we go back to the same thing we were doing before the crisis. But this time we are saying, we are under servere pressure to abolish the 41 items and we are asking in whose interest is it.”

Okoroafor maintained that no amount of pressure would make the apex bank to reverse the suspension or float Naira. He noted that there is no single country, not one that allows her currency to float freely.

Accordingly, he said the apex bank has decided to run a CBN that focuses on the welfare of the people. “We decided not to float the Naira for very obvious reasons, when the exchange rate was N155 to a dollar the foreign investors didn’t come in droves, they say it was undervalued.

“We moved it slightly to N168 and then ended up at N197 they didn’t come. We introduce the interbank market and allowed the Naira some air and it floated to N280, the foreign investors didn’t come. Now we moved it to between N305 to N315 they are not here. My brothers and sisters when will they come is it when it goes to N1000. We believe that we cannot go through that part because we cannot kill our people.

Those who want Naira to float cited the case of Egypt which floated its currency few months ago. But he pointed out that Egypt has $12 million in foreign aid, receive several billions of dollars in tourism, Egypt has 90 million people that is 50 percent of our population and Egypt has the best medical system in Africa. “Egypt has much better infrastructure than us. But Egyptian inflation moved from 14 percent to 31 percent.

 “If we float the Naira the way Egypt has done, I leave that to your imagination what would happen and the immediate impact of inflation would be on the poor people. Not on some of the big people in Abuja, Lagos, Part Harcourt and Kano. So that is our position,” he said.

The image maker of the apex bank stated that the CBN is working assiduously to sanitise forex market and end the current economic crisis in the nation is facing. He said that the first thing CBN noticed was a severe forex crunch and since the country doesn’t print dollars, their immediate response was to tap into the sources of forex so that there will be inflow.

“The second response was to look at how much forex we are spending and on what. And to say how do we prioritise how much of it we allocate to all these items. And then ensure that some of the items that we still have in this country, that we produce in this country, that we try to limit the way and manner we spend forex on them. That decision gave rise to a list of 41 items that we can produce in this country that we felt that we shouldn’t be spending forex on them so that we can divert the scarce forex we have to sectors, industries, activities that will stimulate growth and create jobs.

“We also tried over time to introduce the interbank forex market where as it where we try to ensure that the market is giving opportunity to also allocate forex. We also try to do some intelligence in the black market to find out how the black market was getting its power and how we could influence that market and divert it to the real market, the interbank market.

“In the whole process, we discovered that what was powering the black market was not really demand but bobbles created by currency speculators. I think that finding is being corroborated by the revelation about people burying money in graves and bushes and in apartments. The question is can any set of economists or public policy managers actually run an economy where a large portion of the cash around is locked up somewhere preparing to launch an attack on the currency.

 “You will discover that a whole lot of theories are surrounding this but the basic impact of this activity is that they have made the market a monster so that the market can no longer be a good reflection of the feelings of the players in the market. So that is the kind of complex situation the CBN has been trying to manage.

“When we discovered that much of the demands in the black market had been a bobble we decided to gradually take off some of the items in that markets like the invincible, the BTA and PTA, school fees and tuition fees. That was why we came up with a policy saying please as from now go to your banks we are going to fund the banks to be able to give you enough forex for these items. And with that we saw that the black market began to collapse.

“I want to say that in this management of scarcity, we have been able to ensure that manufacturing and most of the activities that would stimulate growth get enough forex. We have also as a complimentary policy gone ahead to fund those activities we can produce to replace the gap created by the list of 41 items. And by the way we have never banned any item from being imported. All we have said is that people can go ahead to source their forex to import any of the items on that list. You can see that all we have tried to do have been to focus on the impact of this economic situation on the ordinary people and that is why we have refused to float the Naira,” he said.