The Lagos Chamber of Commerce and Industry (LCCI) has called on the Central Bank of Nigeria (CBN) to lift the foreign exchange restrictions it placed on 41 items, saying the measure was no longer necessary, especially now that the regulator’s official forex window has been closed.
LCCI’s Director-General, Muda Yusuf, in a statement yesterday, said the restrictions have caused considerable loss of jobs, insisting that “many more jobs are at risk as many firms run out of stock of their critical inputs for production,” adding, “for the sake of economic policy coherence, any product that is not on the official import prohibition list of the Federal Government should have access to the autonomous foreign exchange market.”
He agreed that import prohibition is a vital trade policy matter which should be undertaken in an integrated manner with inputs from other government agencies, including the Ministry of Finance, National Planning and the Nigeria Customs Service, among others, but cautioned however that the consequences of import prohibition are far reaching and go beyond the narrow perspective of conservation of foreign exchange.
” The dimensions of inter sectoral linkages, employment implications, Customs revenue implications, breaches of regional and other international trade treaties should be taken into account,” pointing out that fiscal policy measures, such as taxation and import tariffs could be used, as and when necessary, to shape the behaviour of economic operators as the policy thrust of government dictates.
Yusuf stressed that the normalisation of the foreign exchange market is very crucial at this time to stem the current slide in the economy, factory closures, job loses, escalating prices, the waning Gross Domestic Product (GDP) growth and weakening investor’ confidence, stating that the resultant impact is being felt across all levels of investments, including large companies, medium enterprises, small business, micro enterprises and the informal sector.
The LCCI chief called for a proper understanding of the significance of the foreign exchange policy in the Nigerian economy, given the fact that the economy is not only highly import dependent, but also the fact that it is assuming greater integration with the global economy. In this regard, he called for transparency, and the need to ensure that there is adequate liquidity and stability in the administration of the foreign exchange market.
“It is very important to get it right! A foreign exchange market characterised by transparency, liquidity and stability is imperative for rebuilding the economic growth momentum, boosting investor’ confidence, encouraging foreign exchange inflows and creating of jobs,” Yusuf said.
He urged the CBN “to urgently articulate a comprehensive framework for the autonomous market,” which he categorized as the “major forex market.”
Yusuf called for a proper definition of the forex market, saying foreign exchange from diaspora remittances, export proceeds, forex sales by foreign investors and multinational companies and forex sales by donour agencies and other NGOs, should be allowed to be freely traded in the autonomous market.
The LCCI chief critised what he termed, “excessive regulation and documentation,” saying that they should be avoided as in his opinion, they “could undermine the development of a robust autonomous forex market.”
He said: “Current controls and regulations of forex inflows into the economy should be relaxed, without necessarily compromising the money laundering prevention measures of the relevant authorities. Overregulation considerably hurts the economy. It is paramount at this time articulate policies that would stimulate and unlock the huge potentials in diaspora remittances and other capital inflows into the economy. Diaspora remittances to Nigeria were $21 billion in 2014, according to World Bank sources,” he stated.
The CBN had in July 2015 restricted about 41 items, including vegetable oil, poultry products, cosmetics and plastic and rubber products among others from access to foreign exchange from its official window, arguing that the country has the capacity to produce those items locally.
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