The Lagos Chamber of Commerce and Industry has said inappropriate foreign exchange policies are discouraging new capital investments.
The President, LCCI, Mrs Toki Mabogunje, during the group’s quarterly press briefing on the state of the economy, pointed out that there had been a sharp decline in capital inflows between the first quarter and the second quarter of the year.
She said this could be linked to the capital control policies introduced by the Central Bank of Nigeria.
The LCCI boss called for the introduction of a market-driven foreign exchange management framework in order to boost investors’ confidence.
“Inappropriate forex policies could discourage fresh capital inflows, be it foreign direct investment, portfolio investment, remittances, and non-oil export proceeds into the economy,” she said.
“This fact is evidenced by the sharp plunge in the level of capital imported into Nigeria from $5.9bn in the first quarter to $1.2bn in the second quarter, partly caused by the capital control policy of the CBN.”
She called on the apex bank to consider policies that would ensure the availability of forex rather than focusing on policies to control demand for forex only.
The CBN in the past three months had introduced policies to conserve the country’s foreign exchange resources as dollar inflows had been impacted by the fall in oil prices and global pandemic.
The apex bank had stopped Form M for transactions whose payments were routed through a buying company/agent or any third parties.
Also, foreign exchange restrictions were placed on food and fertiliser imports at the formal segment of the foreign exchange market.
The government also proposed a Product Pricing Verification Mechanism to checkmate overpricing or mispricing of goods and services imported into the country.
Mabogunje complained that the resolution of disputes with the Nigerian Customs Service on import valuation and classification matters were becoming increasingly challenging for the business community.
She said indiscriminate valuation had led to rise in the cost of importation.