The Nation Newspaper

Tag: CBN’s forex policy

  • Full text of Saraki’s speech during IMF Chief’s visit

    Full text of Saraki’s speech during IMF Chief’s visit

      Facebook  Google+  LinkedIn

    ADDRESS BY THE PRESIDENT OF THE SENATE AND CHAIRMAN OF THE NATIONAL ASSEMBLY, HIS EXCELLENCY, SENATOR (DR.) ABUBAKAR BUKOLA SARAKI TO THE MEETING WITH THE PRINCIPAL OFFICERS OF THE NATIONAL ASSEMBLY ON THE VISIT OF MADAME CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND, (IMF) ON 06 JANUARY, 2016.

    Protocol:

    Your Excellency, on behalf of my Distinguished and Honourable colleagues, I warmly welcome you and your entourage to the National Assembly. Your historic visit today, is a testament of the importance you attach to the role of the legislature in the attainment of economic development policies.

    Your Excellency, your visit in this New Year is very auspicious as we begin to deliberate on the 2016 Appropriation Bill as the world economy rebalances in response to falling commodity prices, in particular oil.

    Your Excellency, this National Assembly congratulates you and appreciates the new IMF recognition of the pivotal role parliamentarians could play in forging sustainable development policies for the attainment of the IMF mandate. To me this is critical to minimizing the erroneous perception on IMF policy prescriptions and conditionalities that have been entrenched over the years especially in Africa.

    This, I believe, is vital to the success of the Fund’s policies and programmes not only now but also in the future. As legislators, we play an important role in making our people understand IMF advice, policy trade-offs, consultations and other engagements, so that ownership, transparency and accountability are brought to bear in economic policy choices.

    Since the year 2000 when the IMF/World Bank Group founded the Parliamentary Network which is an independent, non-governmental organisation, participation in the programmes has been on the rise by legislators from all over the World. We commend the initiative. This outreach to legislators is a win-win situation since one of the objectives is to familiarize the legislators with the rationale behind the IMF advisory.

    We recommend that IMF should further strengthen this network as a veritable tool towards greater convergence of understanding and engagement.

    Here at home, the effect of the low oil prices on government revenue is challenging us to think out of the box in funding the repair of infrastructure, boosting employment, and securing our borders and people. These are no mean tasks and we welcome the support of our friends in this trying period.

    Our economic fundamentals remain robust and the economy is resilient to absorb the current oil price shock. The situation is bringing out the entrepreneurship in us. Our private sector is also rising to the challenge. We assure you we will use this occasion to build a new economy diversified away from the perennial effects of oil price shocks.

    The 8th National Assembly will provide the legislative leadership in ensuring a conducive environment for business to thrive.

    The Nigerian legislature strongly believes that having a collaborative working relationship with the Executive Branch of government brings development closer to the people. Since the advent of the new administration, we have worked closely to stabilize the economy and steady the fiscal environment. This, we have indeed demonstrated by the speedy passage of the Medium Term Expenditure Frame Work (MTEF) and recently in the postponement of our recess in order to receive President Muhammadu Buhari to present the 2016 Appropriation Bill. We have also set in motion activities towards reforming our oil and gas industry through legislative initiatives in order to meet international best practices.

    Engaging with our people the issues we strongly made here of FOREX – to do business.
    This is expected – what IMF can do to bridge the gap.
    CBN to advise open – allow Forex
    (ii) No devaluation.
    (iii) Loans to SMEs – bring interest to CBN
    (iv) Technical assistance
    (v) Support policies.

    The 8th Senate Legislative Agenda is of particular interest in Parliamentary Network initiative which brings together parliamentarians and representatives of private sector as well as civil society organisations to discuss how to improve the environment for doing business in the developing world and how countries can increase their ranking in publications such as “Doing Business Report”.

    The purpose of our Legislative Agenda is to enable us focus our lawmaking in areas that will help create jobs, expand our infrastructure base and make our economy work for the benefit and happiness of the majority of our people. Pivotal to the attainment of this overarching objective is the state of the Nigerian business environment. In collaboration with major stakeholders, the 8th Senate is presently signing a memorandum of understanding on “The Enhancing Nigerian Advocacy for Better Business Environment Project,” a National Assembly business and investment round-table initiative, with developmental organizations.

    These roundtables will provide opportunity to the private sector to work closely with the legislature in developing friendly-business environment.

    The initiative will commence with a review of institutional, regulatory and legal instruments currently becoming impediments and bottlenecks to doing business in Nigeria.

    Your Excellency, Distinguished and Honourable colleagues, in closing, I want you to take away these messages:

    Legislature/Executive Collaboration on the Economy:

    The National Assembly is committed to working closely with the Executive arm in addressing the challenges facing the Nigerian economy. This is the position on both sides of the aisle;

    Diversifying and Modernizing Our Economy:
    We will support the Executive with legislation where necessary to give confidence to investors.

    Blocking Revenue Leakages:
    We are assiduously working towards blocking identified legal loopholes on revenue leakages and expanding our tax base;

    Conducive Business Environment:
    We are giving priority to legislation aimed at providing a more conducive business environment in general and reducing the cost of doing business in Nigeria; and

    Ending Impunity and Reducing Corruption: The National Assembly more than ever before, is working at improving its oversight systems to expose corruption wherever it may be, and providing better legal frameworks to entrench the rule of law and end impunity.

    The global economy is currently well interconnected. With our economic weight in our sub-region, a well functioning Nigerian economy provides a strong pillar to its growth. We therefore, implore the international community and financial institutions to partner with us in supporting our economic development aspirations.

    On this note, Your Excellency, we welcome you once again to our beautiful city and wish you the Season’s Greetings.

    Bienvenue!

    PRESIDENT OF THE SENATE

  • On CBN’s forex policy

    On its website, the Central Bank of Nigeria (CBN) states that its purpose is the delivery of price and financial stability and the promotion of sustainable economic development. Surely realising this in a country as complex as Nigeria will be no easy task, more so at this time. The price of crude oil has fallen by about 60per cent from its peak in June of last year exposing Nigeria to a term of trade shock and causing an exodus of capital from the country which has put pressure on the Naira. The Central Bank devalued the currency in November and in February, closed the official window but the pressure on the Naira has persisted. The Central Bank has issued several circulars aimed at controlling demand at the forex market, an unconventional move it calls demand management. The most notable has been the restriction of forex flow to importers of 41 items, the ban on cash deposits into domiciliary accounts and the imposition of daily spending limits on foreign purchases by card users.

    Demand management has helped stabilise rates at the interbank market. However the CBNs policy has put the businesses of some of those affected in great peril and the consequent effect on the price and availability of affected goods is beginning to manifest in the real economy. The ban on some importers created a larger black market with the black market premium reaching levels unprecedented that the central bank had to double forex sales to bureau de change operators to discourage practices aimed at profiting from the wide spread but this has in turn made cross border currency smuggling a thriving business, with the players benefiting far more from the CBN policy than the industries the CBN claims its policies would assist.

    Investors have lost faith in the ability of the CBN to hold rates preferring to stay out of Nigerian assets for as long as the exchange rate uncertainty persists, a major reason the Nigerian stock market has one of the worst year-to-date performances in the world. In a recent development, JP Morgan announced it will remove Nigeria from its Emerging Market Government Bond Index citing reduced liquidity at the interbank market and reduced transparency from the CBNs policy that have made it difficult for investors to exit the market.

    The demand management policy has been widely criticised, with most of the critics calling for an outright devaluation of the naira and some even asserting that the country will gain from the boost to exports. However it is important to note that Nigeria has unique attributes that makes it different from the typical economy with responses to policy actions that have in certain times diverged from the typical economy. This sometimes calls for situations where the central bank’s effort to manage economic shocks should include the use of unconventional measures. Nigeria’s non-oil export, which would benefit from devaluation, is virtually non- existent. Historical data shows that the Naira’s downtrend over several decades has occurred with a simultaneous contraction in non-oil exports as against an expected increase suggesting the role of other factors hindering the growth of non-oil exports in Nigeria. While these factors persist, devaluation will not yield the expected boost to exports. In addition, Nigeria happens to be a low income country with over two-thirds of its population living below the poverty threshold. The country also doubles as highly import dependent, relying on imports for much of its consumer products. Devaluation in such an economy is sure to cause hardship for a majority of the population, throwing many Nigerians into poverty.

    The CBN is not the first to use unconventional measures to try to maintain economic stability. Indeed manyregulatory banks across the world, after running out of conventional ammunition, resorted to atypical measures to restore economic stability during and after the 2008 financial crises. Thus the CBN in trying to achieve its mandate should be innovative in its approach to steer the economy out of crises especially when it has run out of orthodox options. However it is important for policy makers to know that our world of irrational decision makers is far more complex than the most sophisticated economic models used to guide them in decision making. In this situation, there will always be policy risks that are either hidden from sight or grossly underestimated by these models. This makes it necessary for a policy maker about to enter uncharted territory to ensure that the expected benefits of such a move far outweigh the visible risk if he is to be reasonably confident of emerging successful. However in my opinion, the CBN policy of demand management doesnot meet that criterion.

    An alternative to demand management with much less potential to do damage is for the CBN to create a separate forex market for investors where the Naira will be sold at a discount to the price at the interbank market. The price spread between both markets should be wide enough to eliminate the perceived risk by investors. To give its move some credibility, the CBN would have to admit that the Naira is overvalued but at the same time try to hit home its message that the peculiarity of Nigeria’s economy would make a further devaluation contrary to its mandate of maintaining economic stability.

    The bank might further highlight the object of its move which is to address the exchange rate uncertainty that has deterred investors from Nigerian assets. The use of forward guidance will be instrumental in gaining investors’ confidence, portraying the Central Bank as proactive and strategic in its use of unconventional monetary policy. Forward guidance has been used by major central banks to calm financial markets through periods of unconventional monetary policy, proving to be most useful during transition periods. If implemented, this move will boost foreign investments in Nigeria which will in turn improve the forex receipt of the CBN giving it a leeway to reverse at least the most unhelpful of its demand management measures which have been largely reactive and have exposed Nigerians to both hidden and unhidden risk.

    A well-structured market for investors as a sole policy move will be helpful in the short to medium term. Beyond that, it will be less effective in maintaining economic stability especially if the price of crude oil doesnot improve. Thus it should be seen as a way to buy time for the CBN to implement a well-planned import substitution policy with distinct medium and long term objectives. The CBN should work on a strategy with a medium term objective of boosting both our export volumes and the competitiveness of local substitutes to our major imports.

    For the long term objective, the CBN should collaborate with government in identifying and promoting industries where Nigeria has a strong comparative advantage. Such a strategy should not focus on using trade restrictions but rather on carrying out targeted actions that will significantly improve business conditions for local industries. Decades of restricting international trade in Nigeria, save a few cases, have failed to bring about the desired effect of stimulating local production primarily due to Nigeria’s peculiarity as a safe haven for corrupt practices. The beneficiaries of trade restriction have been smugglers and privileged holders of import waivers with the worsening of living conditions for the rest of the population.

     

    • Uyi, 500-Level Medicine and Surgery, UNIBEN

  • On CBN’s forex policy

    On its website, the Central Bank of Nigeria (CBN) states that its purpose is the delivery of price and financial stability and the promotion of sustainable economic development. Surely realising this in a country as complex as Nigeria will be no easy task, more so at this time. The price of crude oil has fallen by about 60per cent from its peak in June of last year exposing Nigeria to a term of trade shock and causing an exodus of capital from the country which has put pressure on the Naira. The Central Bank devalued the currency in November and in February, closed the official window but the pressure on the Naira has persisted. The Central Bank has issued several circulars aimed at controlling demand at the forex market, an unconventional move it calls demand management. The most notable has been the restriction of forex flow to importers of 41 items, the ban on cash deposits into domiciliary accounts and the imposition of daily spending limits on foreign purchases by card users.

    Demand management has helped stabilise rates at the interbank market. However the CBNs policy has put the businesses of some of those affected in great peril and the consequent effect on the price and availability of affected goods is beginning to manifest in the real economy. The ban on some importers created a larger black market with the black market premium reaching levels unprecedented that the central bank had to double forex sales to bureau de change operators to discourage practices aimed at profiting from the wide spread but this has in turn made cross border currency smuggling a thriving business, with the players benefiting far more from the CBN policy than the industries the CBN claims its policies would assist.

    Investors have lost faith in the ability of the CBN to hold rates preferring to stay out of Nigerian assets for as long as the exchange rate uncertainty persists, a major reason the Nigerian stock market has one of the worst year-to-date performances in the world. In a recent development, JP Morgan announced it will remove Nigeria from its Emerging Market Government Bond Index citing reduced liquidity at the interbank market and reduced transparency from the CBNs policy that have made it difficult for investors to exit the market.

    The demand management policy has been widely criticised, with most of the critics calling for an outright devaluation of the naira and some even asserting that the country will gain from the boost to exports. However it is important to note that Nigeria has unique attributes that makes it different from the typical economy with responses to policy actions that have in certain times diverged from the typical economy. This sometimes calls for situations where the central bank’s effort to manage economic shocks should include the use of unconventional measures. Nigeria’s non-oil export, which would benefit from devaluation, is virtually non- existent. Historical data shows that the Naira’s downtrend over several decades has occurred with a simultaneous contraction in non-oil exports as against an expected increase suggesting the role of other factors hindering the growth of non-oil exports in Nigeria. While these factors persist, devaluation will not yield the expected boost to exports. In addition, Nigeria happens to be a low income country with over two-thirds of its population living below the poverty threshold. The country also doubles as highly import dependent, relying on imports for much of its consumer products. Devaluation in such an economy is sure to cause hardship for a majority of the population, throwing many Nigerians into poverty.

    The CBN is not the first to use unconventional measures to try to maintain economic stability. Indeed manyregulatory banks across the world, after running out of conventional ammunition, resorted to atypical measures to restore economic stability during and after the 2008 financial crises. Thus the CBN in trying to achieve its mandate should be innovative in its approach to steer the economy out of crises especially when it has run out of orthodox options. However it is important for policy makers to know that our world of irrational decision makers is far more complex than the most sophisticated economic models used to guide them in decision making. In this situation, there will always be policy risks that are either hidden from sight or grossly underestimated by these models. This makes it necessary for a policy maker about to enter uncharted territory to ensure that the expected benefits of such a move far outweigh the visible risk if he is to be reasonably confident of emerging successful. However in my opinion, the CBN policy of demand management doesnot meet that criterion.

    An alternative to demand management with much less potential to do damage is for the CBN to create a separate forex market for investors where the Naira will be sold at a discount to the price at the interbank market. The price spread between both markets should be wide enough to eliminate the perceived risk by investors. To give its move some credibility, the CBN would have to admit that the Naira is overvalued but at the same time try to hit home its message that the peculiarity of Nigeria’s economy would make a further devaluation contrary to its mandate of maintaining economic stability.

    The bank might further highlight the object of its move which is to address the exchange rate uncertainty that has deterred investors from Nigerian assets. The use of forward guidance will be instrumental in gaining investors’ confidence, portraying the Central Bank as proactive and strategic in its use of unconventional monetary policy. Forward guidance has been used by major central banks to calm financial markets through periods of unconventional monetary policy, proving to be most useful during transition periods. If implemented, this move will boost foreign investments in Nigeria which will in turn improve the forex receipt of the CBN giving it a leeway to reverse at least the most unhelpful of its demand management measures which have been largely reactive and have exposed Nigerians to both hidden and unhidden risk.

    A well-structured market for investors as a sole policy move will be helpful in the short to medium term. Beyond that, it will be less effective in maintaining economic stability especially if the price of crude oil doesnot improve. Thus it should be seen as a way to buy time for the CBN to implement a well-planned import substitution policy with distinct medium and long term objectives. The CBN should work on a strategy with a medium term objective of boosting both our export volumes and the competitiveness of local substitutes to our major imports.

    For the long term objective, the CBN should collaborate with government in identifying and promoting industries where Nigeria has a strong comparative advantage. Such a strategy should not focus on using trade restrictions but rather on carrying out targeted actions that will significantly improve business conditions for local industries. Decades of restricting international trade in Nigeria, save a few cases, have failed to bring about the desired effect of stimulating local production primarily due to Nigeria’s peculiarity as a safe haven for corrupt practices. The beneficiaries of trade restriction have been smugglers and privileged holders of import waivers with the worsening of living conditions for the rest of the population.

     

    • Uyi, 500-Level Medicine and Surgery, UNIBEN
  • Implications of CBN’s forex restrictions on CPO

    Implications of CBN’s forex restrictions on CPO

    The consumption of palm oil in Nigeria amounts to 1.0 million MT per annum. 90.0% of palm oil is consumed by food industry and the remaining 10.0% is used by the non-food industry.

    Foods like noodles, vegetable oil, biscuits, chips, margarines, shortenings, cereals, baked stuff, washing detergents and even cosmetics thrive on palm oil. Noodle industry alone consumes 72,000 MT of imported palm oil and the leading, domestic palm oil producers fail to meet this demand.

    Saddened by unavailability of sufficient oil palm in the Nigerian market, some industries have proactively announced strategic alliances to invest in oil palm plantations.

    Large estate in the palm oil plantations and output in Nigeria, which is the only category producing palm oil used by the food industry  produced 80,000tons annually, which is only 10% of local production and the overall domestic oil production was 1.35mn tones, the consumption demand was 2.25mn tones resulting in a shortfall of 900,000 tones.

    Of course, the Federal Government is striving to sustain the crude palm oil industry of the country, but the country needs to have a stable economy and survival in the palm oil industry as the Local production is currently unable to meet the quantity as well as quality requirements of the industry which is leading to scarcity of raw materials and inflation.

    Also the economy is feeling the impact as there is inadequate supply of palm oil, and desperate food producers’ will use non quality palm oil thereby jeopardizing public health and safety. The future industrial growth is being threatened because palm oil was and is one of the widely used raw materials and migration of industries and investments in Nigeria to other neighbouring countries will surely affect the economy.

    So why Forex Policy? The Central Bank of Nigeria (CBN) uses forex exchange policy to achieve certain macroeconomic goals of price stability, low unemployment, reduce inflation among other objectives. These goals are attained by manipulating the money supply and influencing credit conditions in the economy. Because money as a means of exchange is the major lubricant of the nation’s economic activities, the techniques of manipulation of forex policy are often dictated by whether the apex bank wants to pursue an expansionary or contractionary policy.

    Recently, however, the application of forex policy by the CBN has drawn the ire and criticisms of stakeholders in the manufacturing and private sector, with some describing the policy measures as emasculating. In a move to promote locally-produced goods not only to build robust foreign reserves, but also to create jobs for the teeming population, the CBN shut out Crude palm Oil with the 41 imported items from the foreign exchange (forex) window.

    Though the CBN maintained that its action was necessary for economic stability, members of the organised private sector believe the move may have been wrongly conceived without the apex bank properly appraising domestic capacity for production of some of the excluded items.

    The CBN Governor, Godwin Emefiele said, “My personal as well as the bank’s institutional analyses of the situation compelled us to believe that we needed to aggressively begin the process of feeding ourselves by ourselves and producing much of what we need in this country.

    “The huge amounts of money the country spends on importing things we can produce locally have become a significant drag on our Foreign Exchange Reserves. Most of you are aware of the often-quoted number of N1.3 trillion, which is what we spend on average importing Rice, Fish, Sugar, and Wheat every year,” he said.

    Explaining his personal frustration over the development, the bank chief queried why the country should be importing produce when vast amounts of comparable quality produced by poor hardworking local farmers across the belts of Nigeria are being wasted, ignored and depleting huge forex too.

    Since the announcement of the new policy, a few have wondered why Crude palm oil (CPO) was included in the list while many commentators have also passionately intoned on why the country continues to import CPO, when our vast quantities of palm oil produced by our hardworking farmers across the belts of the country are being wasted or simply ignored.

    Renowned Economist, Bismarck Rewane observed that the decision by the apex bank sends a signal that there is a cash flow problem adding that it could however affect the level of inflows and outflows in the country.

    Dr. Chiken Obidigbo, former chairman of the Manufacturers Association of Nigeria (MAN) in Enugu, Ebonyi and Anambra states, was of the opinion that the CBN’s measure was a mere scratch of the problems besetting the real sector of the economy.

    According to the President of Lagos Chambers of Commerce and Industry(LCCI), Alhaji Bello, expressed concern that many of the products on the list of the 41 products are intermediate goods for example Crude palm Oil which are critical input for many manufacturing firms as well as other critical sectors of the economy.

    He revealed that the development will put several investments at risk with implications of job losses, quality of loan assess in the banking system and the welfare of citizens.
    He said the list is prone to multiple definitions and discretionary interpretations by agencies and institutions responsible for implementation.

    He said the alternative foreign exchange markets are not deep enough to meet the demand of the essential intermediate products on the exclusion list, saying the exclusion of the items from the forex market is as good as import prohibition.

    He said the policy measure will lead to widening of exchange differentials between the interbank markets and the parallel markets, adding that the immediate consequence will be rampant round tripping of foreign exchange which the apex bank has limited capacity to nip in the bud.

    He also said the policy has far reaching implications for investors in fabrication, construction and real sector. He said facilities granted to investors affected by the shock of this policy are also at the risk of going bad.

    Besides, in a  communiqué issued at the end  of an interactive session with the Central Bank of Nigeria in Lagos, the  chamber said the  new CBN policy is ambiguous as the restricted items are not well-defined and specific, plunging both manufacturers and banks into confusion regarding the intent of the apex bank.

    The chamber urged the CBN to immediately amend the policy with full product definition and specification of all restricted items, including HS Codes and excluding any items which are non-substitutable industrial raw materials from the list.

    Forex is required for the enhancement of the nation’s capacity to process raw materials into finished goods, such as factory production lines which help in the economic growth of the country.

    When these and many more segments of the nation’s economy need the scarce foreign exchange to acquire items and equipment that will result in value creation and a concomitant accelerated growth of the overall Nigerian economy, it is therefore foolhardy to jump to policy making without consultation.

    For importers of some raw materials needed for the production of some of the prohibited commodities, the apex bank’s decision is prone to multiple definitions and discretionary interpretations by agencies and institutions responsible for implementation.

    Due to the resultant effect of the forex policy, Nigeria today is losing investments worth billions of naira. So as the low production and high demand for the product both domestic and industrial needs continue to generate much agitation, importation is inevitable for the sustenance of the little pride of the country’s industrial image.

    For Nigeria to meet the shortfall in local usage of crude palm oil and be self-sufficient, Nigeria needs a total plantation of 300, 000 hectares of land. This no doubt is huge and requires the support of government through its Ministry of Agriculture by providing suitable and adequate land for willing investors to invest in large estate plantations in the country.

    Therefore the exclusion of the items from the forex market is as good as import prohibition”, Bello added.

    Nigeria now produces a meagre 1.7 percent of total world production which is inadequate for local consumption which is put at about 2.7 percent. The road to being self-sufficient is a long one as a whopping $10billion will be required and a minimum of 20 years of palm tree planting at a very large scale.

    And for now, importation of palm oil serves, as the best alternative to the low quantity produced in the country pending the development of large estate plantations for which some of the big time stakeholders such as PZ, Dufil, Okomu and Presco have engaged themselves in expansion and recapitalisation through their various backward integration processes.

    [news_box style=”2″ display=”category” link_target=”_blank” category=”1225″ count=”8″ show_more=”on” show_more_type=”link”]

  • Cancer patients, others hard hit by CBN’s forex policy

    Cancer patients, others hard hit by CBN’s forex policy

    There are fears that the new forex policy may cause a major setback in the medical sector.

    The Central Bank of Nigeria (CBN), last week, directed commercial banks to pay for their dollar purchases at the official forex window 48 hours ahead of the bid date.

    Under the policy, banks and other forex dealers are required to deposit the naira equivalent of the total forex bids to the apex bank 48 hours in advance. The lenders responded by transmitting same message to their customers, who must now fund their accounts 48 hours before the forex bid date.  Besides, dollar deposits are being rejected.

    The policy, which made no exceptions for medical service providers, is adversely affecting importers of radiopharmaceuticals used in treatment of cancer patients and others with serious ailments, The Nation learnt yesterday.

    For the Centre for Nuclear Medicine –an International Atomic Energy Agency (IAEA) Project—at the University College Hospital (UCH), Ibadan, which banks with Guaranty Trust Bank Plc, the policy shift means more pains for its cancer patients.

    As a non-governmental organisation, the Centre does not have huge cash at its disposal and remitting funds 48 hours before bid date will strain its already drained resources, a source said. This will lead to reduced number of patients who will have access to the cancer drugs, hence, aggravating an already difficult situation.

    The Nation gathered that since the CBN began the enforcement of the policy, the importation of drugs for the patients has been put on hold. The drugs for the centre’s patients are shipped to get to Nigeria within three to four days when they should be taken by patients. The centre “operates more or less like a charity”, being a UN agency, but it is lumped together with big businesses by bankers, The Nation learnt.

    Besides of such organisations are exempted from the rules, CBN Director of Corporate Communications Ibrahim Mu’azu said the apex bank could not give exemptions because it will not know where to draw the line.

    In his view the centre can overcome the funding challenge by planning ahead.

    But, an expert, who pleaded not to be named because he is not permitted to talk to the media, believes that both the CBN and the banks do not understand the damage the policy can do to the health sector, including the patients undergoing treatment at the centre. He urged the CBN to grant waiver to providers of medical services, because of the sensitivity of their cases.

    “Both the CBN and the banks do not understand the harm they are doing to the health of cancer patients who need these drugs to stay alive. Why can’t they give a waiver to providers of medical services. For us, the drugs used in UCH are not produced in Nigeria or even West Africa. They are imported from France and Hungary,” the source said.

    The bank sends the Euro to the company that produces the cancer drugs in France and Hungary.

    But for both the CBN and banks, every transaction is considered first, as a business.  All must follow the policy.

    Statistics show that Nigeria records 100,000 new cases of cancer every year, and at the moment, there are about two million recorded cases. Experts say the incidence is increasing at an alarming rate in developing countries, such as Nigeria, due to the poor state of health facilities, poor funding of cancer care, late diagnosis and detection of the deadly disease.

    Speaking on the new forex policy during the Bankers’ Committee meeting held in Lagos last weekend,  GTBank CEO, Segun Agbaje said: “I think the policy will help the CBN a lot to determine what the real demand for forex is or what spurious demand is. It is going to ensure that what we operate is effective demand backed by cash. So, that way, it is easy for the Central Bank to actually determine what the demand is and ensure it is a proper demand.”

    This is not the first time the centre for Nuclear Medicine has been caught up in the complexity of a new policy.

    The late President Umaru Yar’Adua approved a special clearance for the centre’s goods at the airport to avoid unnecessary delay that could damage the radioactive drugs used for cancer and thyroid patients.

    “He was a chemist and he understood it all. He quickly granted the request,” said the source.

    The centre wrote to President Muhammadu Buhari to save it the problems of clearing its radioactive materials at the Lagos Airport. This was after a sudden increase in clearing tariff by the Nigerian Aviation Handling Company (NAHCO) and Customs, who delayed the clearance and issue of gate pass for the centre’s clearing agents. The impasse has been resolved – apparently after President Buhari’s intervention.