Yesterday, the Central Bank of Nigeria (CBN) took a step closer to converging the official and parallel market exchange rates. The CBN issued a circular notifying market participants of the removal of the forex restriction on 43 items previously barred from being imported using foreign exchange (FX) accessed through official channels. This announcement comes after the CBN collapsed multiple official exchange rate windows on June 14, 2023.

Eight years ago, on June 23, 2015, the CBN imposed restrictions on these 43 items to conserve foreign exchange for essential imports and promote local production of said items in line with the Buhari administration’s import substitution policy. However, the absence of an outright ban on importing these items meant that importers had to move their forex demand to the parallel market, widening the exchange rate premium.

The banned items included vegetable oils, soap & cosmetics, palm oil products and other raw materials