The Lagos Chamber of Commerce and Industry has said there is a need for the Central Bank of Nigeria to review its policy on the repatriation of export proceeds in order to encourage exports.
The chamber also called for the unification of the exchange rates in the different foreign exchange markets in the country.
The CBN had in January instructed banks to bar all exporters with unrepatriated export proceeds from accessing all banking services by January 31, 2021.
The Director-General, LCCI, Dr Muda Yusuf, said at the group’s quarterly press briefing that lack of access to forex remained a major challenge facing members of the chamber.
He 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.”
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.