ECONOMYTOP STORY

LCCI, WAFIEM defer on impact of CBN forex policy

Lagos Chamber of Commerce and Industry (LCCI), and the West African Institute of Financial and Economic Management (WAIFEM) have described the new flexible foreign exchange framework as not surprising. In separate statements, the two bodies expressed divergent views on how the new policy would impact the economy and the populace.

The Director General of LCCI, Mr Muda Yusuf commended the policy of the apex bank, stressing that it was a position that the organised private sector had canvassed for over a year while the Director General of WAIFEM, Prof. Akpa Ekpo stated that it was not surprising, given that the governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, had earlier hinted at the policy shift.

Yusuf explained in the statement that the new policy would benefit the economy as it would improve liquidity in the forex market, which would boost investor confidence. “There will be a significant improvement in the allocative efficiency of foreign exchange, supply of forex to the forex market will be enhanced as confidence improves, especially from capital importation, export proceeds and Diaspora remittances,” Yusuf said.

He spoke further: “There will be a considerable moderation in exchange rate as supply of forex improves, the federation account will benefit from better revenue inflows from the CBN as sale of subsidised forex comes to an end, the policy is a major incentive to exporters as they will have unfettered access to their export proceeds”.

Ekpo, who traced the foreign exchange crisis to scarcity of foreign currency, which is not Nigeria’s currency argued: “the new forex regime is assuming that the Nigerian economy is productive and manufacturing or adding value to the production chain – exporting such commodities to earn forex which is then ploughed back into the economy. The Nigerian economy is not that sophisticated to implement the type of forex market mechanism regime enunciated by the CBN.

“If the economy is productive and manufactures for exports, then the forex market would operate like any other market in the economy. But this is not the case. It is important to create an environment which favours production and manufacture for export before allowing the market to take control of the forex market implying depreciation of the Naira. Perhaps the intervention fund of the CBN to boost export is to create such an enabling environment. However, what is the track record of such fund? Has it been implemented?” he asked rhetorically.

Ekpo welcomed the idea of the CBN playing the role of moderator explaining that the ability to intervene when the need arises will influence the direction of the market; he however warned that there are other forces more powerful than the market.

“The CBN would be a major player in the forex market. It would buy and sell forex and in so doing would still influence the direction of the market. In addition, there are other forces more powerful than the market. If the market was sacrosanct, why not allow the 41 items to benefit from this new framework?,” he stated.

“Our major concern should be on how to get out of the present economic recession. If the recession deepens, then monetary and exchange rate policy would be ineffective. The government through fiscal policy should urgently implement all the measures in the budget so as to reflate and put the economy on the path of recovery. There is too much focus on the foreign exchange market. For an economy like Nigeria, it would have been better to tinker with the managed float framework,” he argued.

Yusuf also called on the CBN to review its position on the ban placed on 41 items from accessing foreign exchange from the official market, arguing that many of the items on the list are inputs for industries, and adding that many industries were being currently impacted adversely.

As he explained, “The exclusion has led to considerable loss of jobs in industries, distributive trade sector and maritime sector. It has led to considerable loss of customs revenue, which will impact negatively on the federation account and fiscal viability of governments at all levels.” He added that, “the phenomenon of smuggling may be aggravated in respect of some of the excluded items.”

 

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  • Today, I went to the beach with my kids. I found a sea shell and gave it to my 4 year old daughter and said “You can hear the ocean if you put this to your ear.” She placed the shell to her ear and screamed. There was a hermit crab inside and it pinched her ear. She never wants to go back! LoL I know this is completely off topic but I had to tell someone!

  • My coder is trying to convince me to move to .net from PHP. I have always disliked the idea because of the expenses. But he’s tryiong none the less. I’ve been using WordPress on a number of websites for about a year and am nervous about switching to another platform. I have heard great things about blogengine.net. Is there a way I can import all my wordpress content into it? Any help would be greatly appreciated!

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  • Do you have a spam problem on this website; I also am a blogger, and I was wanting to know your situation; many of us have developed some nice practices and we are looking to exchange solutions with other folks, please shoot me an e-mail if interested.

  • Hiya! Quick question that’s entirely off topic. Do you know how to make your site mobile friendly? My site looks weird when browsing from my iphone4. I’m trying to find a template or plugin that might be able to resolve this issue. If you have any recommendations, please share. Thanks!

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  • Hello this is kind of of off topic but I was wanting to know if blogs use WYSIWYG editors or if you have to manually code with HTML. I’m starting a blog soon but have no coding knowledge so I wanted to get guidance from someone with experience. Any help would be enormously appreciated!

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