As if emefiele makes the decisions...  Well, at least they've told him what to do. Who can guess what will happen? 
Temitayo Jaiyeola 27 December 2021
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CBN Governor, Godwin Emefiele
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The Centre for the Promotion of
Private Enterprise, an economic think
tank, has advised the Central Bank of
Nigeria to review its ban on some of
the over 40 items which the regulator
has stopped importers from accessing
foreign exchange to bring into the
country.
Economists at the centre also said
there was a need for the CBN to
review its foreign exchange policy in
2022 with a view to improving dollar
liquidity in order to rescue the ailing
naira and help industries to grow.
The group disclosed this in its
economic and business environment
review for 2021 and agenda for 2022,
a copy of which was obtained by our
correspondent on Sunday.
According to the CPPE, there is a need
for the CBN to engage stakeholders as
its current forex policy regime is
negatively affecting investors,
manufacturers and other
stakeholders.
The CPPE said, “In the bid to reduce
the pressure on foreign reserves, the
CBN had excluded over 40 items from
access to foreign exchange in the
official window.
“Some of the products on this list are
intermediate products for some
manufacturing firms which have
negatively impacted some
manufacturers. It would be advisable
for the CBN to have a robust
engagement with the stakeholders to
review this list in the New Year.”
According to the organisation, the
CBN should adopt a flexible exchange
rate policy regime, and allow the
pricing mechanisms to reflect the
demand and supply fundamentals in
the foreign exchange market.
It said, “Our proposition is that we
should adopt a flexible exchange rate
policy regime. We would like to
clarify that this is not a devaluation
proposition.
“Rather, it is a pricing mechanism
that reflects the demand and supply
fundamentals in the foreign exchange
market. It is a model that is
sustainable, predictable and
transparent. It is a policy regime that
would reduce uncertainty and inspire
the confidence of investors.
“It is a policy framework that would
minimise discretion and arbitrage in
the foreign exchange allocation
mechanism. A flexible exchange rate
regime is a policy choice adopted to
cope with changing demand and
supply conditions in the forex
market.”
According to the centre, adopting a
market rate would deepen the
autonomous foreign exchange market
by liberalising inflows from export
proceeds, diaspora remittances,
multinational companies, donor
agencies, diplomatic missions, and
others.
It added that a flexible exchange rate
would enhance liquidity in the forex
market, increase investors’
confidence, and ensure a more
transparent model for forex
allocation.
Also, the CPPE said the Cash Reserves
Requirements imposed on Nigerian
banks by the CBN is one of the highest
globally, adding that it is a major
impediment to financial
intermediation by banks.
According to the experts, some of the
banks have a CRR of 50 per cent and
more against the official CRR of 27.5
per cent.
It said, “Yet, financial intermediation
is supposed to be the major function
and essence of the banking system.
The high CRR has made it difficult for
the banks to play their primary role of
financial intermediation. Their
profitability is also adversely
impacted because of limited room for
credit creation activities.
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“Indeed, the ways and means finances
of the apex bank pose greater
liquidity risk to the economy than
bank deposits. We therefore seek a
reduction in CRR so that the banks
can be better placed to play their
primary role of financial
intermediation in the economy.”
The CPPE also said challenges of
infrastructure, rising insecurity,
climate change, low productivity in
agriculture, monetisation of fiscal
deficit, and depreciation of the naira
were fuelling inflation in the nation.
It said headline inflation was 16.47
per cent in January, and rose to a
peak of 18.17 per cent in March,
before falling to 15.40 per cent in
November.
The organisation said, “Headline
inflation has been on the increase on
a month-on-month basis from January
to date, albeit at a reducing rate.
“Meanwhile, food inflation has been
consistently higher than headline
inflation and core inflation for most
part of the year. Inflationary pressure
remains a major cause for worry both
for businesses and the households as
it remains elevated.”
According to the organisation, the
implications of these include,
increasing poverty, increasing risk of
malnutrition, increasing social
tension, and criminality.
It added that businesses had had to
deal with weak purchasing power,
low sales and low profit margin, low-
capacity utilisation, high production
and operating cost, and high risk of
increased business mortality.
The CPPE said in order to tackle
inflation, the nation needed to boost
productivity to drive output growth,
reduce the depreciation of the naira
exchange rate, and improve the flow
of foreign exchange.
The CPPE added that the nation needs
to, “Minimise the monetisation of
fiscal deficit. CBN financing of deficit
should be strictly limited to statutory
threshold spelt out in the CBN Act.
“Government should seek creative
ways of addressing insecurity in order
to pave the way for farmers to return
to their farms. Address cost of
logistics. Address the ease of cargo
clearing at the port. Address climate
change concerns. Review our trade
policy to bring down the cost of some
intermediate products for
manufacturers.”
https://punchng.com/review-forex-ban-on-40-items-to-save-naira-economists-tell-cbn/ |
