The Lagos Chamber of Commerce and Industry has lamented the hardship faced in accessing foreign exchange for importation of raw materials,equipment, saying the development was inimical to investments and job creation in Nigeria.
Mrs Toki Mabogunje, the president of the chamber,who conveyed the position at a press conference in Lagos,expressed concerns over positions of both the fiscal and monetary authorities regarding the country’s foreign exchange framework.
She said:“Lack of cohesion among policymakers sends a negative signal to the investment community, worsens uncertainty, and further dampens investor confidence”
She emphasized the need for the Central Bank of Nigeria and the Economic Advisory Council to be on the same page as far as the country’s foreign policy framework is concerned,adding that Nigeria’s forex policy framework should be reviewed to expand the scope of market mechanism in the determination of exchange rate.
“It is critically important for policymakers to harmonise the multiple exchange rates into a single market-reflective rate, which is imperative in strengthening investor confidence and engendering macroeconomic stability,” she said.
According to her,the unification of exchange rates would complement recent efforts by the Central Bank Of Nigeria geared at enhancing liquidity at the supply segment of the foreign exchange market.
She said ensuring clarity on the country’s foreign exchange policy direction among participants in the investment environment is even more imperative in attracting private investments into the economy.
She added:“Meanwhile, many investors in the economy, including those in the real sector, are lamenting the difficulties in accessing foreign exchange for importation of raw materials, equipment and some critical inputs for production and processing. This is in spite of the notable recovery in crude oil prices.
“This situation is taking a huge toll on capacity utilisation, business turnover, sales, and profitability. Sustainability of some of these investments are currently at risk with dire implications for retention of jobs.”
She said all these underscored the need to review the current foreign exchange management model.
The LCCI acknowledged the efforts of the CBN towards boosting dollar inflows into the economy through the Naira for Dollar Scheme,adding that the gesture should extended to other sources of foreign inflows, especially export proceeds.
According to her, the major drivers of core inflation in recent months include lingering forex liquidity concerns, evidenced by the widening disparity between parallel market rate and Nigerian Autonomous Foreign Exchange Rate; pass-through effect of the exchange rate depreciation on imported raw materials and finished items; elevated energy prices; upward adjustment of electricity tariff, and cargo clearing challenges at the ports.
Mabogunje said, “The continued uptick in inflation has profound implications for all stakeholders in the economy including households, businesses, and investors.
“It weakens purchasing power and consequently worsens the poverty conditions; it escalates operating and production costs and erodes profit margins, and ultimately undermines investors’ confidence.
“Galloping inflation complicates the pursuance of the price stabilisation mandate of the CBN even at a time the bank is deepening its intervention efforts to boost credit flows to the real economy.”
