LCCI kicks against CBN’s new forex policy 

Concerned by the implications of the Central Bank of Nigeria, CBN’s directive on the exclusion of 41 products from access to the foreign exchange market, the Lagos Chamber of Commerce and Industry [LCCI], has charged CBN to suspend its directives, until when a proper study of the demand and supply gaps in the various sectors affected by the policy is conducted.

The chamber in a statement signed by Alhaji Remi Bello, President, Lagos Chamber of Commerce and Industry, disclosed that the foreign exchange market has been under pressure in the last couple of months, a situation which poses significant challenges to the CBN with regard to the stability of exchange rate and the protection of foreign reserves.

However, the chamber further noted that directive will result in major disruptions, dislocations and panic among investors in the economy because of its multidimensional and far reaching implications. 

It said that most of the products on the list of the 41 products are intermediate goods which are critical inputs for many manufacturing firms as well as other critical sectors of the economy. 

It also added that the new development will put several investments at risk with implications for job losses, quality of loan assets in the banking system and the welfare of citizens including iron rods, cold rolled sheets, wire rods, reinforcing Bars, Polypropylene granules, glass and glass ware.

It however urged that a painstaking gap analysis to determine the domestic capacity for production vis-a-vis the demand should have preceded the policy decision by the CBN. 

It said , ”The list is prone to multiple definitions and discretionary interpretations by agencies and institutions responsible for implementation.

The HS codes of the items are not indicated in the CBN circular. Discretionary interpretations create room for corruption.

”The alternative forex markets – parallel market and the BDCs are not deep enough to meet the demand of the essential intermediate products on the exclusion list.

Therefore the exclusion of the items from the forex market is as good as import prohibition.

The chamber also noted that the policy measure will lead to the widening of exchange differentials between the interbank markets and the parallel markets.