The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), has called for a single exchange rate, saying the existence of multiple exchange rates was not good for investors confidence. DAVID AGBA reports
Established in 1960, NACCIMA is the umbrella organisation for all the various affiliate member chambers within the country. The Association’s membership is voluntary and it encompasses City, State and Bilateral Chambers, Business/Professional Association and Corporate bodies. It champions the course of business through its advocacy role and influence public policies that promote free enterprise. The perspective of the NACCIMA is in accordance with contemporary ideas of the chambers of commerce movement in a relatively free enterprise economy the world over.
Its call for affixed exchange rate is probably not whimsical. More so, the exchange rate regime in Nigeria has over the last one year not given the needed stability to the naira, especially owing to the recession witnessed since 2016.
Matter of fact, the Central Bank of Nigeria (CBN), is still struggling to find a lasting solution to the exchange rate situation which has affect every sphere of the economy with inflation running haywire.
A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime where a currency’s value is fixed against either the value of another single currency, to a basket of other currencies, or to another measure of value, such as gold.
Having requested a fixed exchange rate, the Chamber also demanded the reconstitution of boards of the federal parastatals and a review of the federal government’s economic team to include members of the Organised Private Sector (OPS).
National President, NACCIMA, Chief Bassey Edem, stated this while presenting the Chamber’s review of the economy in 2016 and outlook for 2017.
He said, “There is a need for the harmonization of the various exchange rates in the country. A situation where there exist various rates for different purposes does not auger well for the polity. It also does not boost investors’ confidence.” adding that “It is over 18 months since the Boards of the federal parastatals were dissolved by the present administration. Apart from it being illegal for the parastatals to operate without boards, the non-reconstitution of the various boards encourages corruption and ineptitude. Transparency and accountability We counsel that the President should as a matter of utmost urgency, reconstitute the Board of the various parastatals to encourage prudence, effective decision-making, transparency, and accountability”.
“Also, we strongly believe that it is time to review the composition of the Economic Team to include representatives of the organised private sector in order to remain focused on getting the country out of the current recession. The Nigerian economy is currently facing multiple challenges with the highest inflation in recent times, high lending rates, and unemployment; declining foreign reserves; and negative GDP Growth rates. Thus, our outlook for the year 2017 should focus on policy formulation with the following short-term goals: “Policy Cohesion: Monetary Policy remains focused on controlling inflation by maintaining a double-digit Monetary Policy Rate.
He. however said that the cost-push nature of the current inflationary trend presents an opportunity to reverse this trend. Fiscal Policy, in the short-term, should focus on pushing down costs especially those related to power generation as this has been shown to be a major component of production costs.” “Possible policy directions are the liberalization of the Petroleum Industry or increased private sector participation in the Power Sector. With reducing production costs will come reduced product prices; a lower inflation rate would encourage a fall in the MPR and interest rates effectively channeling more funds to the real sector. “Foreign Exchange: In the coming year, we are optimistic that rising prices of crude oil and a de-escalation of Niger-Delta militancy will lead to accretion or a steady increase in the nation’s foreign reserves, thereby eliminating the artificial scarcity that exists in the foreign exchange market. In light of this, we are hopeful that market forces will be allowed to govern the process to determine prices.
“Policy Monitoring & Evaluation (Transparency and Open Government Data): The presentation of the 2017 Budget to the National Assembly has given the private sector the opportunity to examine the trend in government expenditure. Transparency in this form provides invaluable feedback to government and creates a sense of accountability in all arms of government. In the short-term, policies that ensure transparency and openness in government data will largely improve government efficiency.
An effective Monitoring and Evaluation system is a sure bet for effective management of resources. “Food Security, Import Substitution and the Manufacturing Sector: Federal Government policies should stimulate local production and processing of raw materials. Although protection of infant industries by banning foreign alternatives may be necessary to correct the imperfections in the market, the government should realize that the abrupt nature of such sudden policy shift “banning” creates uncertainty even within the industry to be protected. As such investor confidence should be paramount in the design of policy and implementation.”
