The Lagos Chamber of Commerce and Industry (LCCI) and the Centre for the Promotion of Private Enterprises (CPPE) have commended the Central Bank of Nigeria (CBN) on the removal of the ban placed on 43 items from accessing the official exchange rate.
The President of LCCI, Dr. Michael Olawale-Cole, in a statement on ‘CBN’s Removal of Foreign Exchange Market Restrictions,’ also commended the apex bank’s decision to raise the supply of dollars to meet the demand pressure in the Nigerian foreign exchange market.
Olawale-Cole described the move as a noteworthy commitment to offset the foreign exchange backlog as part of the measures to address the current foreign exchange challenge plaguing the market.
He said: “This policy change is expected to reduce the demand pressure on the parallel market and ensure that there is a gradual convergence in foreign exchange market rates.
“The LCCI particularly appreciates this stand to promote orderliness and professional conduct by all market participants to ensure market forces-determined exchange rates on a willing buyer- willing seller principle.
“Over the years, the chamber has consistently expressed its concerns about the restrictions in the foreign exchange market and its consequences on the divergence of the foreign exchange rates.
“In our opinion, this policy is a market-friendly step towards unifying the exchange rates and is expected to curtail inflationary pressures in the short term.”
The LCCI recommended that the CBN should adopt creative financing options for clearing the short to medium-term backlog and establish a mechanism to address foreign exchange unification under the current system.
It said: “The chamber believes the authorities must pursue the right monetary policy reforms to improve the investment climate and boost investor confidence. We call on the CBN to ensure transparency and accountability in banks’ foreign exchange dealings at the investors’ and exporters’ windows.”
Speaking in the same vein, CPPE also welcomed the decision of the CBN to discontinue the policy that excluded 43 items from accessing the foreign exchange market.
The Founder of the CPPE, Dr. Muda Yusuf, described the termination of the policy as a move in the right direction and part of the policy normalisation process.
Yusuf said: “The exclusion of the 43 items was one of the several drivers of distortions in the foreign exchange market. The exclusion of the items also contributed to the persistent divergence in rates between the official window and the parallel market.
“The exclusion was also in conflict with extant trade policy as the items were not under import prohibition in the first place. It was an example of lack of policy coordination under the previous administration.”
He said that the new directive would also improve transparency and disclosures in foreign exchange transactions and advised the CBN to avoid market suppression tendencies, especially outside the I&E window.
“All policy impediments to forex inflows should be removed,” he said, adding that the “fiscal authorities should continually monitor the economic landscape to shape the character of fiscal policy measures to regulate imports in line with comparative advantage principles.
“We need to worry about the risk of import surge. There is also a need to upscale the use of fiscal policy measures to boost domestic production and productivity,” Yusuf said.