The Lagos Chamber of Commerce and Industry (LCCI) has expressed concerns over the Central Bank of Nigeria's (CBN's) monetary policy committee's (MPC's) recent decision to retain the current demand management model in the foreign exchange market.
It noted that the move reflects an ominous indifference of the CBN to the plight of various stakeholders over its foreign exchange management strategy.
The chamber in a statement on the apex bank's MPC communique issued submitted that the present model, which is essentially an administrative allocation mechanism has profound collateral consequences.
" We share the concern of the CBN that there are no easy choices given the dwindling crude oil price, dwindling accretion to reserves, the weak fiscal position of government and the pressure on foreign reserves. We also share the submission of the apex bank that the federal government needs to unfold its economic agenda to boost investor’s confidence and reduce uncertainty in the economy," the LCCI stated.
LCCI said submissions by stakeholders in the economy to the CBN to review its list of items not valid for foreign exchange were completely ignored by the MPC, saying that the matter was not even mentioned in the communique.
"The LCCI is gravely disturbed by this disposition. Stakeholders had raised issues of classification of items for proper identification of the products and to make implementation less disruptive of the economy. There are many items on the list which are critical inputs of many production firms. Sustainability of many manufacturing activities is currently at risk, especially with the apparent unwillingness of the CBN to shift ground," LCCI added.
"Meanwhile, in the spirit of transparency and in line with the values of the present administration, we call for the publication of the list of beneficiaries of the foreign exchange allocations in the past one month. This will allow for a more robust discussion and engagement on the way forward, theLCCI stressed.
Furthermore, the chamber stated that it was worried about what it described as the apparent trivialisation by the CBN of developments in the parallel market segment of the foreign exchange market, maintaining that it is curious that the unprecedented disparity in the rates did not seem to bother the CBN.
"We affirm that the widening disparity in rates has profound implications for the economy. It is an incentive for round tripping, it would create distortions in the economy, it compromises the principle of level playing field in the economy, it would make the management of the foreign exchange market vulnerable to all manner of sharp practices and corruption. The large informal sector of the economy is fed largely from this segment of the market. These are issues the CBN cannot afford to ignore," LCCI said.
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