The Central Bank of Nigeria (CBN) on Monday ordered commercial banks to stop processing new Form M documents for maize imports with immediate effect.
In a circular on Monday, the bank said the policy was aimed at ramping up local maize production by stimulating the economy to safeguard rural livelihoods lost in the wake of the COVID-19 pandemic.
Consequenly, the regulator asked lenders to submit current Form M, opened for importation of maize by tomorrow. Form M is a document to be completed by all importers into Nigeria. The documentation also enables lenders submit bids to the Central Bank for dollars to pay for imports.
Bankers estimate forex demand of around $2 billion from importers with past due obligation. Meanwhile the government is seeking to fund a balance of payment gap of around $14 billion in 2020, according to the CBN amidst rising dollar demand has been swelling and piling pressure on the naira. Importers with past due obligations have scrambled for hard currency while providers of foreign exchange, such as offshore investors, have exited.
Dollar shortage for Nigeria, whose reserve has declined 20 percent to $36.13 billion over the last year, has been further worsened by oil price crash caused by the coronavirus pandemic.
Last week, the naira eased on the official market, losing 5.5 per cent against the dollar after the CBN devalued the currency, in its second adjustment in six months. Data from the U.S. Department of Agriculture estimate Nigeria’s maize imports at 400,000 metric tons (MT) for 2019/20 against a consumption of 10.7 MT over the forecast period.
Nigeria imports maize mainly from the U.S. The latest action is coming almost twelve months after the apex bank in August last year ordered banks to halt processing milk imports on a credit basis after it slammed a ban access on forex for dairy to spur local production. It later lifted forex restrictions for milk imports for six firms.