41 items’ restriction will deter FX rate convergence –Soludo

A former central bank governor, Professor Charles Soludo, has called for the complete elimination of the “41 restricted item” by the CBN if it hopes to archive a unified exchange rate regime.

Soludo made the call at the Recap Conference in Lagos, while speaking on the theme ‘Nigeria’s Current FX and Interest Rate policies: Thought and Suggestions’.

He said: “Eliminate the so-called 41 items. You cannot unify the forex market with those kind of things. You have two ways if you don’t want things to come in; you use the exchange rate and the commercial policy, raise the tariffs on them. If it is expensive for people to import, they will not import them. That is how to do it on a sustainable basis

“As day follows night, if not done by this regime, subsequent regime will eliminate those kinds of things. The current way we are doing it is ad hoc, costly, distortionary and harmful to the economy.”

The former apex bank governor argued that, it didn’t take much to get it done, “You need to know the kind of exchange rate relative you want; an over value, real, effective exchange rate or a competitive real effective exchange rate, you must have strategy with that decision,” he added.

It could be recalled that the CBN’s Acting Director, Corporate Communications, Mr. Isaac Okoroafor, had defended the CBN’s stand, noting that, despite criticisms, the bank would not drop the policy nor bow to “self-serving” interests.

Soludo however said many of the banks are smiling heavily because they play the forex games. “If you create the environment for people to play games, they play the games. They have been playing the games and making handsome profit,” he said.