The President, Nigeria-British Chamber of Commerce (NBCC), Prince Dapo Adelegan has urged the Federal Government to develop policies that will ease access to foreign exchange (forex) for critical goods.
He also wants the government to drive import substitution strategies by supporting small businesses with adequate funding to achieve price stability and increase aggregate output in the country.
Reviewing the economy, he advised the government to ease foreign exchange policies to encourage foreign direct investment (FDI).
He said the government will have to adopt Import substitution strategies to reduce demand for foreign exchange. With a N6 trillion budget for next year, he said borrowing plans may require some forex depreciation to attract foreign capital to fund the Federal Government’s spending plans.
Adelegan said the restriction of 41 items from accessing forex through the Central Bank of Nigeria (CBN) window has led to reduction in trade relations, loss of jobs and rise in exchange rate in the country.
He noted that Nigeria has recorded only about $1.35 billion as FDI this year, saying this is about 40 per cent less than the figure recorded last year.
He said a worse situation has been recorded for investments in financial assets, where huge sell-offs had been seen. He said foreign investors’ confidence has dropped as a result of the foreign exchange policies, with JP Morgan removing Nigerian bonds from its index.
“The Nigerian economy has been growing at a slower pace, having recorded an average growth rate of 3.05 per cent in 2015,” he said,
“The weak growth rate is largely attributed to low global crude oil price which, is the mainstay of the economy. Official exchange rates are not reflective of current market positions; significant amounts of foreign exchange flows occur outside the regulated window.”
He pointed out that inflation rate has remained stable, around 9.3 per cent in the last quarter in spite of low GDP growth, while the demand for Nigerian assets with low FDI and portfolio investment as reflected in the capital market has continued to drop.
Adelegan, who was recently inaugurated as the 14th President of NBCC in Lagos, however reaffirmed the commitment of the Chamber to fostering trade relations between Nigeria and the United Kingdom.
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