TV 360 Nigeria reports that the President of the LCCI, Remi Bello. who spoke at a media briefing said that the economy under President Muhammadu Buhari has continued to reel in the face of depleted government revenue as a result of the fall in global oil prices.
He further availed that the biggest obstacle for investors in Nigeria at the moment is the CBN policy on foreign exchange.
According to Bello: “The impact on the economy and private sector are as follows:
- The sovereign risk perception of Nigeria has worsened over the last two months. Several credit lines for Nigerian investors have been lost following the numerous cases of payment defaults to foreign suppliers. Even reputable blue chip companies have defaulted for the first time in the several years of business relationship with their foreign suppliers. Considerable damage has been done to the image of many companies and the country in the international trade and investment arena. A major confidence crisis has been created for investors.
- Many ongoing transactions before the issuance of the CBN circular have been stalled. These were transactions under Bills for Collection for which credit facilities were given by foreign suppliers and for which funds could not be remitted.
Many companies are on the brink of collapse because of the failure to access foreign exchange for raw materials and other critical inputs. Even companies whose inputs are valid for foreign exchange also suffer the same fate.
- The CBN measures is taking a huge toll on investors in the free trade zones. The policies are also a violation of the laws setting up free trade zones. Investors in the zone are currently in a quandary.
- The goodwill that Nigeria enjoyed at the advent of this Administration in the international Business arena is beginning to be eroded by the foreign exchange crises.
- There is risk of international isolation of Nigeria if current policies are not reversed.
- The economy is now faced with a scenario where there is a much greater pressure to move funds out of the economy than bring funds into the economy. This can be likened to a run on a system. This is a typical scenario which a confidence crisis could create. Future international trade transactions, financial and investment relations are now at risk
- Round tripping of forex has continued to flourish because of the disparity in the exchange rate between the official and parallel market. Inflow of forex into the two autonomous sources has been adversely affected. It is worthy of note that Diaspora funds into the country was about $23billion n 2013. The current policy will discourage the inflow of such funds which normally help to strengthen the supply side of the foreign exchange.
- Many small businesses have moved to neighboring countries to effect transfers to their suppliers abroad.
- The banking system is being denied considerable revenue which typically accrues from trade finance and related services to importers and exporters.
- There is the risk of a rapid growth in non-performing loans in the banking system as investors grapple with the problem of access to foreign exchange.
- Many parents are in a major dilemma on how to remit funds to their children schooling abroad for their upkeep. Current rules only allow for remittance through Form A for school fees and other direct payments to the schools abroad.
- Many hotels in the country are currently saddled with lots of cash [foreign currency] which they could not lodge in their domiciliary accounts, let alone doing business with it. It is a major issue for the hospitality industry in the country.”
- The foremost chamber of Commerce in Nigeria called on President Buhari to review the situation saying the CBN should allow market forces determine the exchange rate with some minimal intervention.
Below is the full text of the Press Conference addressed by the LCCI President;
2015 3RD QUARTER PRESS CONFERENCEPRESENTED BY THE PRESIDENT,
LAGOS CHAMBER OF COMMERCE AND INDUSTRY
ALHAJI REMI BELLO, FCA
9TH SEPT. 2015
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