The Lagos Chamber of Commerce and Industry (LCCI) has advocated quick intervention to salvage the nation’s currency.
The president of LCCI, Mrs Toki Mabogunje, stated this at the quarterly press briefing held yesterday in Lagos.
According to Mabogunje, while the Central Bank of Nigeria (CBN) has adopted the Nigerian Autonomous Foreign Exchange Rate (NAFEX) rate as the official rate in the gradual transition to a unified exchange rate system, the currency market is still beset with persisting liquidity challenges evidenced by wide premium between the NAFEX and parallel market rates.
To consolidate this positive development, she stated that there was a need for the CBN to scale up its intervention efforts and roll out more friendly supply-side policies to boost liquidity in the market.
She added that this would help bolster investor confidence and attract foreign investment inflows into the economy.
She noted that, “whenever there is a free fall of naira Exchange Rate, at the parallel market segment, as we are currently witnessing, the CBN applies demand containment and/or price control measures as seen from the 43 items ban and quest to peg the exchange rate of the naira.
“Tightening measures have always failed to stabilise the exchange rate in Nigeria, it only redirects FX transactions to the underground arrangement, with unintended consequences of increased pressure on the exchange rate and creating wide premium between the official and parallel market exchange rate.”
She emphasised that the forex market was still faced with liquidity challenges, saying many investors are lamenting about the difficulty in accessing foreign exchange for the importation of raw materials, equipment and critical inputs for production and processing.
The president of LCCI added that deliberate efforts towards making the business environment more conducive for MSMEs and large corporates at the national, subnational, and local government levels are imperative.
Mabogunje further said: “It is our collective responsibility to seek and demand an enabling investment environment for the advancement of the Nigerian economy and the good of all investors and economic players with the right policy and regulatory framework.”