LCCI canvasses relaxation of FX market

As the Monetary Policy Committee of the Central Bank of Nigeria (CBN) meets this week, the Lagos Chamber of Commerce and Industry (LCCI) has called for the normalisation of the Nigerian foreign exchange (FX) market to ensure depth and robust autonomous market.

In a statement signed by Muda Yusuf, director-general, LCCI, the chamber said the apex bank needed to urgently articulate a comprehensive framework for the autonomous market (which is now the major FX market), while also ensuring that the scope of the market was clearly defined.

According to the chamber, ensuring a deep FX market involves allowing Diaspora remittances, export proceeds, FX sales by foreign investors and multinational companies, as well as FX sales by donor agencies and other NGOs, to be freely traded in the autonomous market.

“The adoption of this model would have a significant moderating effect on the exchange rate,” LCCI 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 to articulate policies that would stimulate and unlock the huge potentials in Diaspora remittances and other capital inflows into the economy,” the chamber said.

It further called, once again, for the lifting of foreign exchange restrictions on the 41 items, as it has caused considerable loss of jobs.

“Many more jobs are at risk as many firms run out of stock of their critical inputs for production. 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,” LCCI noted.

“Import prohibition is a vital trade policy matter which should be undertaken in an integrated manner with inputs from the Finance Ministry, National Planning, Trade and Investment and the Nigeria customs service. 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. Fiscal policy measures [taxation and import tariffs] could be used, as and when necessary, to shape the behavior of economic operators as the policy thrust of government dictates,” the LCCI pointed out.