Nigeria: Citigroup Urges CBN to Lift Forex Restrictions on 43 Items

Citigroup has called for the removal of foreign exchange restrictions on 43 specific items imposed by the Central Bank of Nigeria (CBN) as part of efforts to address challenges in the forex market.

This recommendation was presented in the CEEMEA Frontier Credit Market Commentary, authored by credit analyst Ayso van Eysinga, following his visit to Nigeria.

In the report, Van Eysinga stressed the importance of not only clearing the backlog of forex demand but also lifting the restrictions on the 43 items. He stated, “Clearing out the ‘backlog’ needs to be paired with a more refined FX market – as the Central Bank governor put it: an ‘elegant’ one. There are all kinds of regulations that need to be removed to get rid of the tiered FX system: the glaring one is the restriction of FX provision for 43 items.”

In 2015, the CBN released a list of imported goods and services that would not be eligible for foreign exchange in the Nigerian foreign currency market, which initially contained 41 items and later expanded to include two more.

The report also discussed the challenges related to increasing oil production, acknowledging that this is a crucial step for improving Nigeria’s economic situation. However, it highlighted the difficulty of achieving a significant increase in oil production in the short term due to factors such as oil theft.

Tunde Amolegbe, Managing Director of Arthur Steven Asset Management Limited, expressed concerns regarding the government’s ability to raise crude oil production, stating that overcoming challenges in the oil industry is essential for a stronger Naira and price stability.

The report also pointed out the need for drastic measures to reduce systemic liquidity and effectively link monetary tightening to inflation control.

On a broader economic scale, the report expressed optimism about the potential of key figures such as President Bola Tinubu, Minister of Finance and coordinating minister of the economy, Wale Edun, and Yemi Cardoso, the Central Bank Governor, to address the country’s challenges and build credibility and economic stability.

Despite acknowledging the challenges ahead, the report concluded that the collaborative efforts of these leaders, along with support from the private sector, bilateral and multilateral organizations, are essential for Nigeria’s economic progress in the coming year.