The Lagos Chamber of Commerce and Industry (LCCI) has advised the Central Bank of Nigeria to curb multiplicity of exchange rates, a development it argued could send negative signals to investors.
It urged the apex bank to discontinue the official exchange rate of N305 to one United States dollar.
The Director-General, LCCI, Muda Yusuf, who spoke in a telephone interview, explained that the development was inimical to economic diversification and called for the market to drive the forex rate.
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He said, “The current multiplicity of rates is inimical to sustainable economic diversification. The rate should be market-driven and the official rate of N305 to the dollar should be discontinued. It understates the naira equivalent of dollar revenue into the Federation Account.
“It gives a negative signal effect to investors. A market-driven rate would reduce the need and frequency of the CBN intervention in the forex market and inspire more confidence among the investing community. Current efforts at the unification of rates should be heightened.”
Yusuf noted that the foreign exchange policy was a very important policy component, which had a profound impact on the economy.
“A forex regime that perpetuates a rent economy would not serve the cause of economic advancement. It creates opportunities for corruption, resource misallocation, impedes the inflow of investment and creates transparency issues in the allocation of forex.”
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The LCCI DG noted that fiscal policy measures could be used to support priority sectors of the economy, adding that the current approach to taxation should be reviewed.
“There are issues around the rates and multiplicity of taxes, levies and fees imposed on the investing community. The burden of taxation on investors is disproportionately high. It is a disincentive to investment and job creation endeavours.”