By Naomi Uzor

The new Forex policy introduced by the Central Bank of Nigeria (CBN) has created confusion for the manufacturing sector in Nigeria and their banks.

The Lagos Chamber of Commerce and Industry, LCCI, in a communiqué following an interactive forum on CBN Forex policy organised by the chamber, said the new CBN policy is ambiguous as the restricted items are not well-defined and specific and has plunged both manufacturers and banks into confusion.

The communiqué signed by the Director General, LCCI, Mr. Muda Yusuf, said that the chamber  urges the CBN to immediately amend the Forex policy with full product definition and specification of all restricted items, including HS Codes and excluding any items which are non-substitutable industrial raw materials from the list.

“The CBN policy should also allow appropriate time frames for items which require some time interval before local substitutes can be created for imported raw materials. The LCCI reminds both the CBN and the federal government that manufacturers have suffered significant consequences from the recent currency devaluation which they are yet to recover from.

Compounding recent devaluation losses with higher cost of, and/or complete inability to source critical raw materials may push many firms over the precipice resulting in business closures, loss of jobs, declined manufacturing sector production and greater social tension. We invite the CBN and federal government to consider palliatives and incentives to prevent such a scenario” he stated.

He said “We call CBN’s attention to the fact that the fundamental forces the CBN is struggling against are economic and fiscal policy dependent while the Bank continues to exert monetary policy tools almost to a point in which economic harm may result.

The fundamental factors are diversification of the Nigerian economy in terms of exports and government revenue, issues around downstream oil sector deregulation and upstream oil sector fiscal regimes, power sector efficiency and creating alternative economies in solid minerals, agriculture, manufacturing and other sectors towards building a productive, export-led local economy.

These matters cannot be resolved through exclusive deployment of monetary policy tools!” “We call for a conversation between the CBN and federal government so that a more appropriate regime of economic and fiscal policy initiatives can be designed to address these issues.

We also note the critical need for CBN to harmonise its policies with other agencies of government, including Customs, FIRS, SON, Immigration etc. In this specific instance, we call attention to Customs recent introduction of the ECOWAS Common External Tariff (CET) which appears to be at cross-purposes with CBN policy”

He said the chamber urges the CBN to be mindful of the economic role and importance of Small and Medium Enterprises (SMEs) and moderate-sized manufacturers as it develops policy.  “The CBN should avoid policies that may produce oligopolistic and even monopolistic outcomes at variance with its mandate of building a sound economy.

Finally we urge increased engagement and consultation between the CBN and manufacturers and other stakeholders so that policy will be based on a proper understanding of the real impact on all stakeholder groups and the overall economy. The LCCI offers to provide, as it has done in this case, a continuing platform for such engagement” he said