 You're welcome back. We woke up to the news that the CBN has lifted Forex ban on 43 items and that they are to intervene in the FX market. So, we're asking some questions as people who may not understand it, but we're glad that we have this morning joining us on the show, Mukta Mohamed, International Finance and Economics Analyst. He's talking to us here from here in Lagos State. Good morning and welcome to the program Mukta. Thank you for having me. Good morning. Okay. Help us make sense to it. Lifting ban on, Forex ban on 43 items, what does it really mean? Does it really, is it that the ban on importation of these things have been lifted or what's the difference? Let, help us understand it more. Okay. We must go for the genesis of the 43 items. I mean, they were banned in 2015 by the administration of, I think it was Mamo Nupuhari or at the end, Good Love in Belichonata, Mr. Ikan really remember. But that ban was all up till this moment that it was lifted. And the ban was in terms of having assets for FX through the official window. They were to source for FX in order or maybe other sources like by the parallel market. They were not giving FX in the official window. That was just the different, but they were allowed to import these goods into the country. So importation of the goods is still there, but they were not allowed to have assets to FX in the official window. That's just the difference. So it was never banned, but they were banned from accessing FX from official window. That was just it. So this will make the importation of these items very easy for the people who import it? The plan of this idea is how easy it couldn't be. Why were they banned initially? Number one, they were saying that there were times that we should be able to produce in this country. So what the CBN did then was to ban it and then begin to do what we called direct interventions into some of these producers of those products in Nigeria. And now the CBN is saying, no, we are not going to be doing that any longer. Rather, we would rather be communicating with policy, which is definitely what they should be doing. So what that has created is that it has not created a level field. That means that Nigerians also that want to import these products will be competing with Nigerians that are also producing these products in Nigeria here. It could be a challenge in terms of cost of production because we have already seen that already. That because of a bag of rice sometimes outside the shop, this country is cheaper than what you have in this country. And sometimes the difference in terms of price between the local and the foreign sometimes is just maybe 500 or there about. So what will happen now? We have competition. Maybe we will see the local rice that are going in an extinction or bringing down their prices. That is definitely what we see. Almost don't forget the genesis of the ban of this item. Like I said, it was to create a local production and through CBN Direct Intervention. And also again, it was also to make sure that we bring down the cost of those goods when we produce it locally. But that has not been achieved. And we also know that these goods were banned at that time when we under an effects crisis like this because the CBN felt that they were the ones that were sorting for effects more from those who that were importing some of these things like rice, fish and others. So these things will not pass us to your future effects. We saw that at that time that intervention was made, that decision was made. The exchange rate moved from a low of about 250 to a high of 500 before they came out with the import export window that attracted investors into the market. And then they re-stabilized at 360. So definitely all we have been chasing all this while we are just chasing shadows. The main issue that has to do with effects stability has to do with liquidity. Now the unbounding of the 43 item will he add liquidity into the system? That's what we'll be waiting to see in the coming days. Well, I was as a layman, I was just afraid because in a time when we're talking about the fact that the Naira is crashing so much and we're saying, okay, in order for us to strengthen the Naira, we have to look deliberately at what we are going to do to be an exporter more than being an importer of products. And now this is happening. Just like you said, there will be competition between the local producers and the people who are importing these things. Sometimes it's cheaper to get it from outside the country and nothing is being done to make sure that the prices crash from here because the production will be done so much. Will that not be more disadvantage to our economy than an advantage? Well, it will be no disadvantage, especially when the former CB and the social media to feed that we have a 10 self-sufficienties in right production. So that I will soon be one of the largest exporters of rice out of this country. So let's see how that plant and maybe not that we have a competition will begin to start exporting those rice. I will bring a price of what I could pay the cost of rice down. And the good thing about this policy is that it might, it might, if it works out well, bring down inflation because you must know that it's 41, 43 ban items, items that Nigeria use daily. That's one thing we must know now. If they have access to the FX market in the short term, I think that will bring down cost of these goods and services and that I will in turn bring down inflation and inflation. But my challenge is in the era where the CBM is struggling to meet legitimate demands of liquidity. Now you are sending for the 3 ban as an item can assess FX market. You have the liquidity to meet those demands. That is my only fear. It will be because what you are going to see now you are going to see an offshore in terms of as those for the 3 ban items seeking effect into the in the official market. And that will create a lot of demand and supply side. So if they are demanding and demanding so high and the supply is not even the CBM is not able to meet supply, then price will definitely go up. And if they are demanding again and the CBM is not able to meet the supply, then they will still fall back to the parallel market and the parallel market and speculators will now decide to enjoy it. But if CBM is able to meet demand, if CBM is able to meet the demand and meet it on time, again we must not forget that some of these SMEs have now these importers prefer to use the parallel market because of the streamless nature. And when we talk about the streamless nature, the first means whereby they can assess this FX, when they need it compared to the CBM policy where they have to fill it from M, then wait for their turn on and that and that. So if the CBM is able to make it streamless and then investors are not beginning to or importers are not going to the effect to the parallel market, it will definitely drive down rate in the parallel market and maintain stability in the official market. And once you are able to maintain stability in the official market and then drive down price in the parallel market, then you begin to attract foreign direct investors that with mutual liquidity and with that you could have a stable student. But it's neither here nor there, everything is all dependent on liquidity, liquidity, liquidity. Well, I don't know how even the advantages that you will try to outline will benefit the local producers, take for instance like rice, when there is no correspondent measure put in place to make sure it is easy for them to even produce this thing, this rice, to compete with the ones that are being imported. So it's like digging a well to cover a hole on the other side. So which means inflation might come down, but the farmers might be impoverished so much so that there will still be hunger in the land and it's only going to be the people who are able to buy the ones that are being imported that will enjoy because the farmers who use this as income as well may not even have that income anymore because the competition will be to their disadvantage. That's my fear. I don't know how it affects the global investment market and all that, but I'm talking about the local farmers who will be cut off from enjoying this cake as it were. So I don't know how the local producers are factored into this whole issue. Well, if you look at producers, I mean between what they ought to do, I don't think they will have too much challenge because again they were given some of these long single digital, it was the right intervention from CBN, but again unofficially you know that there's a lot of corruption in that process. A lot of politicians were having this money without even owning a farm. So that again is a big challenge and sometimes on the farm what they have again is not enough to meet legitimate demands. So it was a policy that was politicized and also was endorsed with a lot of corruption in it. So I think that is why it could be very tough for them, but ordinary it shouldn't have been because they were boring at the single last year. It was a direct intervention. You mustn't forget that the former Govnov CBN did the rice pyramid in a Buja wedding. The former president Mahmood Puran and others, they started and took pictures and were saying that rice is coming like we don't have the kind of kind of pyramid in Kano. After that they said the rice all disappears. We've not seen those, not even whether they shared it in themselves at that time. So I think it's a wait and see and the CBN is not saying that they will not want to help local production. They said the policy that will help local production of those goods. Now is it any developing economies or developing economies? What they do is that you mention the tariff on these goods that are coming in a high. So it makes the local more attractive. So I don't know that we have to deal with the physical side because the monetary side have done what they ought to do. So it's the physical side that are the ones that deal with tariff, with their high tariff on cement so that it will still discourage them from importing it. Remember that we have been able to meet self-sufficient in terms of cement production. We have three of the biggest cement factories in Africa and one of the most biggest in the world. Some of these cement factories like Dangute cement is even all around. It's all over Africa and so it's there. So I mean we've been looking at them but the only challenge has been in the area of price. So this also we created a price world that is already in the cement industry and that could also bring down the price of cement also and also be able to damage the cost of building of houses. And that would mean that we have more houses that will accommodate more Nigerians that are able to afford some of these government policies on housing that the government is planning to bring and even private investors. That could happen but I like I keep saying all these things are on paper. This is what we expect but in reality need to boost the effects market. We need liquidity. Once liquidity comes and they are able to meet this demand, can assure you that we're beginning to see light at the end of the tunnel. Come on, don't forget that the CBNC is a short time major to boost liquidity. So we may go back to a situation where the worst liquidity is in the system then the lookouts will also begin to benefit from it also because their own price will be low compared to what you've been bringing in. But especially if the government is able to raise tariff on those groups. For me that is the only way you can see the guide lookout production whereby you raise tariff on imported goods. We like foreign goods compared to our own goods. When you talk about our local rise, I think most Nigerians are beginning to have to colonize the local especially the local rise because of the hygienic nature of it, the natural nature of it and the health implication of it which is better than what we have from the foreign rise. So it will see in the coming days what will come. Like I always say, monetary policy when you make your decision, the physical side will begin to look at how they can safeguard the lookouts especially their own producers of those goods and also their own citizens from feeling the effects of what the monetary policy has come Okay well sometimes people just our government just makes pronouncements without a step by step plan on how to achieve what they need to achieve. You're talking about liquidity that is so much needed to achieve what they think is needed in our country. If you were to advise finally now what are the steps that need to be taken for these to be achieved? Step by step how do you go about it? Yes I think first of all I like the way the new CBA governor is addressing the issue. You have said he meets with stakeholders and I think the first step which I think they said they are discussing, the first step I think is to meet with stakeholders which he said they are doing. The second step I think is to make sure that they clear the backlog of the effects demand especially from the aviation sector and foreign portfolio investors whether for the portfolio investors or direct foreign investors and once they do this through it then they will create stability. Once the stability comes in the Nigerians in the diaspora whether remitting effects into the economy will no more be remitting effects by third party. They would rather remit these effects directly through the banks and so that will also create liquidity in the system because there's no need to go into the parallel market when the banking rate and the parallel market are the same. So it's safer you just patronize the banks. So if they do that and then I think this policy would definitely like I said steps by step approach first of all make sure you meet your meeting with the stakeholder which they say when I meet stakeholders I'm talking about the banks I'm also talking about them meeting the security changes, security change operators also and also meeting those that are using the digital platform. Actually I mean the security change operators that meet those that have the after most Nigerians in diaspora are using to transfer money to their relatives here in Nigeria that is one that secondly again like I said again they must clear the backlog with the CBN governor said they are already working behind the scenes to make sure those backlogs are clear and most of those backlogs are from the aviation sector and also from foreign direct investors. Once you do that you begin to end liquidity and thirdly that has nothing to do with CBN that has to do with the physical side. Make sure you reduce oil theft and be able to meet your production quota to open once that is done that means you attract more liquidity for the system and so that will liquidate the system that determine demand. I mean the determined demand is demands for importers to import goods that are necessary in Nigeria. Demand for those that need to pay school fees. Demand for those that will be paying once you meet all the demand. Naturally the rate will stabilize and will calm down because you are able to meet all the legitimate demands. Well I can only wish the central bank governor good luck and if I were to meet him I'll also ask him December is coming we were told that the new notes will be the ones in circulation the old ones will be faced out. What is the plan? We're going to be operating with different kinds of notes because that is our country right now or what will happen to the old or the new notes. It's a common thing. We see the physical we are less concerned about the new all Nigerians are concerned about is the way the Naira has been part of the FX market. Fixed the Naira and again remember that the former acting government has said that the older the new notes will continue to be together even after December and I don't think there's a change in that. What we're interested in is not the notes that makes him. But the value of the money itself. It's the value of being healthy and our value since six today is being parted especially with FX and remember the report that came on we are among the worst performing currency. The two worst performing are the Naira and the Angolan Quasar or what do they call it? And unfortunately again when you look at those are the two high opac nation in Africa. So that tells you that mismanagement is one way or the other. All right thank you so much Mukta for coming on the show this morning. This is how much we can take on this segment. Thank you for having me. You are a pleasure. Yeah you too. That was Mukta Mohamed international finance and economics analyst talking to us from Lagos State here. We'll take a short break when we return we'll be looking at why HPV vaccine matters in preventing cervical cancer. Stay with us.