The Lagos Chamber of Commerce and Industry has predicted that the Forex supply to the economy will face continued pressure in 2021.
It argued that this was in the light of the relatively lower dollar inflows from global oil sales as the price has dropped considerably, lack of foreign investment and Diaspora remittances.
These were contained in the report entitled, ‘Economic and business review for year 2020 and outlook for year 2021’ signed by LCCI signed by its Director-General, Dr Muda Yusuf, and made available to our correspondent on Sunday.
To guard against these shocks, it advised the Central Bank of Nigeria was expected to sustain its demand management strategies via rationing and restricting access to Forex for food imports.
It added, “In year 2021, the CBN will most likely maintain and initiate more demand management policy measures to taper growing demand for Forex amid weak dollar inflows.”
On the closure of borders, the LCCI noted that it hays strengthened demand for domestic agricultural products especially rice and poultry, but it had significantly impacted manufacturing sector negatively as industry players could not import nor export to the West and Central African market.
While it added that though the Presidency ordered the reopening of four borders (Seme, Ilela, Mfun and Maigatari) on December 16, 2020, and also noted that ban on importation of rice and poultry products still subsisted.
Nonetheless, the LCCI reiterated its position “that border closure is not the most strategic and sustainable policy measure in curbing the perennial issue of smuggling.”
It stated further that, “There is need for better border management that will enhance accountability among government agencies that have responsibility for managing the borders.”
The LCCI equally recommended some measures for economic recovery in 2021.
It stated that genuine commitment in implementing key reforms would not only boost output recovery but would also put the nation on a path of macroeconomic stability.
It added, “To have this achieved, the following reforms are imperative:
“Review of the foreign exchange management framework to expand the scope of market mechanism in the determination of the exchange rate.
“The unification of the exchange rates should be prioritised. This is imperative for expediting recovery and bolstering investor confidence.
“Deepening deregulation efforts in the downstream oil industry by (a.) providing industry players with FX to import petrol alongside Nigerian National Petroleum Corporation;
“(b.) Stoppage of government’s interference in PMS pricing;
“(c) Expeditious passage of the Petroleum Industry Bill to ensure efficient transparency in the utilisation of petroleum resources; promote healthy competition and drive private investment in the oil & gas sector.”
It also recommended the sale or privatisation of government’s idle and dead assets, which it said would unlock domestic and external liquidity needed for strong economic growth and improved revenue mobilisation.
It called on the government to mobilise efforts in making the business environment more conducive for Micro, Small and Medium Enterprises and large corporates by addressing structural bottlenecks and regulatory constraints contributing to high cost of doing business.
The LCCI added, “Government must Intensify economic diversification efforts through efficient utilisation of crude oil proceeds to enhance the value-adding capacity of non-oil sectors.”
It called for the re-implementation of the service reflective tariff model to encourage investments for power infrastructures for improved service delivery while ensuring fairness in tariff paid by customers.
It wanted clarity in government’s policy direction by ensuring consistency in economic policies, adding that “policy consistency is imperative to long-term investment planning and business projections.”