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Forex rate multiplicity inimical to sustainable economic diversification—LCCI

Lagos Chamber of Commerce and Industry (LCCI), has joined the league of business groups calling for end to the current multiplicity of rates for foreign exchange in Nigeria, saying, “The current multiplicity of rates is inimical to sustainable economic diversification.”
Giving details of fresh agenda for the Federal Government as President Muhammadu Buhari begins yet another term of office, the Director General of LCCI, Mr Muda Yusuf cautioned against a foreign exchange regime that ‘perpetuates a rent economy’.
According to him, the scenario clearly creates undue opportunities for arbitrage, corruption, resource misallocation, impeded the inflow of investment, and created transparency issues in the allocation of forex.
While arguing that trade policies that determine exports and imports should be guided by sectoral competitive and comparative advantage, LCCI boss averred that “Institutional capacity to enforce the policies should also be considered in trade policy formulation. The Nigeria Customs Service needs to demonstrate better sensitivity to the plight of investors.
“One of the biggest headaches of the business community is the Nigeria Customs Service. Policies should be focused on incentivising resource-based industries which typically have a competitive advantage and good impact on the economy because of the high multiplier effect. The relativity of tariffs between Nigeria and the neighbouring countries should also be considered in the formulation of trade policy.”
Going forward, LCCI chief called for a procurement policy that should be structured to favour sectors that had the potential to be diversification champions as well as leading backward integration companies to drive capacity development than encouraging capital flights.