The Lagos Chamber of Commerce & Industry (LCCI) has renewed its call for a stable and predictable import duty exchange rate to foster a conducive environment for businesses in Nigeria’s productive sector. Concerned about the fluctuating nature of the naira and its impact on import costs, the LCCI advocates for a fixed import duty exchange rate set below the prevailing market rate. This fixed rate, they argue, should be maintained for a minimum of six months to provide businesses with the foresight necessary for effective planning and investment decisions. This predictability allows businesses to accurately forecast costs, manage risks, and make informed decisions regarding production, pricing, and investment. The LCCI emphasizes that a fixed and lower import duty exchange rate will translate to lower prices for imported goods, benefiting consumers and stimulating economic activity.
The LCCI’s advocacy stems from the recent volatility in the foreign exchange market, despite the naira’s recent appreciation against the dollar. While acknowledging the positive impact of the Central Bank of Nigeria’s (CBN) recent reforms and frameworks aimed at strengthening the naira, the LCCI Director-General, Dr. Chinyere Almona, points out that the current import duty exchange rate remains above the official rate. This discrepancy, according to the LCCI, negates the benefits of the naira’s appreciation and continues to burden businesses with high import costs. The LCCI believes that a lower and fixed import duty exchange rate is essential to fully realize the positive effects of the CBN’s reforms.
The LCCI believes that the naira’s recent gains against the dollar are a direct consequence of the CBN’s interventions in the foreign exchange market. These reforms, which include improved transparency and governance, have instilled confidence in the market and curtailed speculative activities in the parallel market. The introduction of regulated trading platforms, such as the Bloomberg BMatch Platform and the Electronic Foreign Exchange Matching System, has further enhanced transparency and responsiveness to market fundamentals. These platforms ensure that transactions are based on genuine market demand and supply, reducing the influence of speculation and promoting a more stable exchange rate environment.
To sustain the naira’s positive trajectory, the LCCI recommends a multifaceted approach that addresses both supply and demand dynamics in the foreign exchange market. On the supply side, the LCCI emphasizes the need to increase crude oil production, a key source of foreign exchange earnings for Nigeria. Higher crude oil output will not only generate more dollars but also provide more feedstock for local refineries, thereby reducing the country’s dependence on imported fuel and conserving foreign exchange reserves. This, in turn, will create a more robust supply of dollars in the market, further supporting the naira.
Beyond boosting crude oil production, the LCCI urges the government to maintain and strengthen existing fiscal measures designed to support local industries and reduce import reliance. These measures include import duty waivers and incentives for the oil and gas sector, particularly initiatives aimed at increasing local refining capacity. The LCCI’s vision is a future where Nigeria achieves self-sufficiency in fuel production, eliminating the need for fuel imports and significantly reducing pressure on the naira. By fostering domestic production and reducing reliance on imports, these measures will create a more balanced and sustainable foreign exchange market.
The LCCI underscores the importance of policy consistency and a long-term perspective in managing the exchange rate and promoting economic stability. The organization emphasizes that the positive impacts of the CBN’s reforms and the recommended fiscal measures will not be instantaneous. There will be a time lag before their full effects are felt on the economy. Therefore, maintaining these policies over an extended period is crucial to achieving sustainable and meaningful improvements. Consistency in policy implementation builds market confidence and allows businesses to make informed long-term investment decisions, ultimately contributing to a stronger and more resilient economy. This long-term approach ensures that temporary market fluctuations do not derail the progress made and that the positive effects of the policies are fully realized over time.
