Nigeria’s Lagos Chamber of Commerce and Industry has described the allocation of 60% of forex to the manufacturing sector as policy inconsistency.
A statement from the Chamber at the weekend said the action may pose risk to efficient allocation of foreign exchange to many users.
The statement was signed by its Director-General, Mr. Muda Yusuf.
It said, “Another policy development that could pose a risk to the stability and transparency of the foreign exchange market is the recent policy on sectoral allocation of foreign exchange. The CBN circular did not indicate any HS Code to properly define what would qualify as raw materials and machinery.
“The first concern will be that of definition. The result of this will be discretionary interpretation by the banks as what qualifies as raw materials and machinery. The second major concern is the potential crowding out of other sectors in the forex market. Sectors outside the manufacturing account for over 85 per cent of the country’s GDP and jobs in the economy. They all have varying import contents in their operations.”
It added, “Therefore, if a minimum of 60 per cent of all forex allocation goes to manufacturing for raw materials and machinery; what happens to other sectors? Currently, petroleum products imports are priority and could take another 25 per cent of foreign exchange. This implies that the rest of the sectors would settle for the balance of 15 per cent. This is clearly not a sustainable framework.”
The Chamber noted that investors confidence was yet to return to various segments of the economy.