In order to encourage exports, the Lagos Chamber of Commerce and Industry (LCCI) has illuminated the need for the Central Bank of Nigeria to review its policy on the repatriation of export proceeds and also the unification of the exchange rates in the different foreign exchange markets in the country.
The Director-General, LCCI, Dr. Muda Yusuf, made this known at the group’s quarterly press briefing that lack of access to forex remained a major challenge facing members of the chamber.
The LCCI boss said, “On the foreign exchange, there are a number of dimensions to
the challenges that businesses faced and are still facing. First is the
exchange rate depreciation. The economy is highly import-dependent and,
therefore, highly sensitive to developments around the foreign exchange market.
So, the exchange rate depreciation that has occurred over the last one year has
led to significant increases in the cost of production.”
He said the naira depreciation
had also affected inflation, sales, and profit margins “because it is not in
all cases that investors are able to transfer the increases in costs to their
customers.”
Dr. Yusuf said, “The second is the liquidity challenge. I am talking about
access to foreign exchange as and when you need it. So, that has been a
problem; it is still a problem. We have members – some of whom are even
beneficiaries of the CBN intervention funds – that, as we speak, are still
having serious challenges accessing foreign exchange even to import equipment
and machinery.”
According to the LCCI DG, if the
country has a forex market that is more market-driven, where there is a
unification of rates, the level of the crisis will be minimised because there
is likely to be better inflows and possibly even a reduction in the demand
pressure.
He said, “Some
of the demand we are seeing in the market are driven by those who want to take
arbitrage opportunities – demand driven by rent-seekers, people who want to
take advantage of the premium in the different markets. So, that is why it is
important as much as possible to narrow the premium and promote the policy of
unification of rates.”
On the problem being faced by
non-oil exporters with regards to the repatriation of export proceeds, Yusuf
noted that the CBN had been rolling out quite a number of measures and
sanctions.
He said, “But
the challenge that the exporters are facing is the challenge of equity in terms
of the returns on their export proceeds. Now, when they export and they
repatriate their proceeds, the proceeds are supposed to earn them an exchange
rate of about N386 to the dollar, when we know that the market rate is well
over N400/$1. So, that has been creating a major challenge of compliance as far
as the export proceeds are concerned. So what the exporters are asking for is
for them to have free access to their foreign exchange anytime they export.”
According to him, the exporters
want their export proceeds exchanged on a willing-seller-willing-buyer basis,
instead of having the CBN impose on them the rate at which to sell their forex.
“So, that is one policy
issue that we think the CBN should review in order to support and promote
exports because if there is any time we need export proceeds, if there is any
time we need to encourage exporters, this is the time. So, do not put policies
in place that will now discourage or suppress the exporters,” Yusuf said.
The CBN had in January instructed banks to bar all exporters with unrepatriated export proceeds from accessing all banking services by January 31, 2021.
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