The circular released by the Central Bank of Nigeria earlier this month listed 41 items which were classified as not valid for Forex. Moving forward the interbank market will no longer provide forex to import them. Of all the items listed, 19 (46%) were directly related to the real estate industry. These include roofing sheets, iron rods, reinforcing bars, tiles, cement, wooden doors and many more. Some of the other non real estate related items classified as not valid include rice, poultry, textiles, private jets and toothpicks.
Real estate developers for large and small scale projects across the country are expected to be affected as many will have to move to the (more expensive) parallel market to purchase their materials. While improvements may be seen on the Naira/Dollar rate at interbank level, increased demand for dollars in the parallel market will make the dollar more expensive. On Thursday the Naira closed at ₦235/$ on the parallel market while the interbank market closed at ₦197.54/$.
This new directive is a product of additional efforts from the Central Bank to remove pressure on the depreciating Naira. These efforts have been commended by some who argue that Nigeria’s manufacturing capacity needs to be improved and import dependency reduced. However, such directives should also be accompanied by favourable legislation and concessions that encourage local manufacturing and production of materials.
See the circular below or download it – CBN Circular – List of Invalid Items for CBN Forex.