Lcci Calls For Flexible Forex System, Organises Forum On Economy
BEVERLY HILLS, March 09, (THEWILL) – The Lagos Chamber of Commerce and Industry (LCCI) has advised the Federal Government to adopt a flexible forex regime in order to ease the liquidity crisis in the forex market and improve its allocation efficiency.
Explaining that flexible exchange rate is different from devaluation, Muda Yusuf, Director-General, LCCI, argued that flexible exchange rate would allow rate movement, depending on fundamentals.
“The flexible exchange will create liquidity in the forex market, it will make planning easier for investors and it will encourage more inflows in the system,” he said.
He further explained in a chat with THEWILL that “flexible exchange rate regime does not mean devaluation. Devaluation is a policy to boost export. It is not necessarily because there is a forex crisis.
“When China devalued, it was not because there was forex crisis, it was because they wanted to boost export. Japan also did it. Other countries have also done it. It is a trade policy strategy. But a flexible exchange regime we are advocating is to improve the allocation efficiency.
On the restrictions of forex to possibly checkmate excess foreign consumption, Yusuf believes that government can check excess foreign good consumption with tax policies.
Assessing the business environment, the director-general said it had been characterised by a lot of uncertainty. “The level of investors' confidence has declined considerably and profit margins are falling,” he observed.
He recognised the global oil price that declined, which has a lot of ripple effect on the economy, government revenue, exchange rate among others, but the response of the CBN to the declining of crude oil price and the scarcity of forex seem to have compounded the problem. “The problem would not have been as much as we have if the policy responses have been right,” he said.
Meanwhile, LCCI has partnered PricewaterhouseCoopers (PwC) Nigeria, an international consultancy firm, to organise a stakeholders' forum on the state of the Nigerian economy.
The objective of the event is to proffer solutions to the lingering economic challenges in the country, by identifying and presenting alternative sources of revenue to government.
The stakeholders' forum, which is billed to hold on Thursday, March 17, at 9:30am at Four Points by Sheraton, Lagos, is expected to bring together key government agencies and major players in the various sectors of the economy, especially the non-oil sector to enable businesses align with the economic diversification and long-term sustainability of the Nigerian economy.
“The Nigerian economy has been witnessing oil price shocks leading to exchange rate volatility and forex market crisis since mid-2014. Overdependence of the economy on dwindling earnings from hydrocarbons has threatened government revenue with extended consequences of slowing growth, rising unemployment, depleting external reserves and higher cost of doing business,” Yusuf said.
“Owing to the foregoing, we are excited about the collaboration with PwC in this research, to present to the general public, its key findings, which identify optimal approaches available to government to stem the unfavourable tide in the economy.
“The special state of the economic forum will focus on options and way out of the prevailing economic crisis for Nigerian government, perspectives on the emerging risks and opportunities for businesses across sectors, among others. Major stakeholders and key players in the economy are expected at the forum.”
Story by David Oputah