‘How government can renew investors’ confidence in real sector, economy’
According to the Director-General of the chamber, Muda Yusuf, the exclusion of the 41 items from the official foreign exchange market should be reviewed to exempt the critical manufacturing inputs, as listed by the Manufacturers Association, that are currently on the list, noting that import exclusion policy should be managed within the context of the trade policy framework.
He stressed that a framework to ensure the liquidity of the foreign exchange market should be urgently put in place to restore investors’ confidence, enhance forex inflows, boost foreign direct investments and foreign portfolio investments, and reduce the level of uncertainty in the economy.
In a chat with The Guardian, Yusuf advised that the tight monetary policy regime should be relaxed to spur domestic investment and consumer spending, saying “import tariffs should be reduced across board to moderate the current high cost of goods and services, boost investment spending and enhance disposal income of citizens.”
On the flip side of the forex debacle, he noted that currency depreciation is inherently a very potent protective mechanism for local production as it enhances the competitiveness of products with high local content.
“Sharp currency depreciation and high import tariffs put together pose a major burden of cost and inflation on investors and citizens. The shock of the simultaneous impact is profound. Import duty on motor vehicles [trucks and cars] should be reviewed to bring down distribution and transportation costs in the economy.
“The automotive policy should be urgently reviewed and reworked. In order to tackle the problem of hunger, the current commitment to agriculture should be sustained. But this should go beyond crop production. It should cover the entire value chain of production, storage, processing, transportation and marketing. Food processing firms should be given special incentives [tariffs and taxes] to reduce the price of staple foods such as bread and noodles”, he added.
With activities in the power sector impacting the revenue profile of the real sector in 2016, Yusuf stated that liquidity in the power sector should be enhanced to ensure improvement in power supply.
“It is heartwarming that all arrears owed to the power firms will be paid in 2017, according to President Buhari at the recent budget presentation to the national assembly. It is equally important to ensure adequate capitalisation of the Electricity Bulk Trader to provide liquidity to the GENCOs and the Gas suppliers.
“The private sector owners of the power firms should also inject greater equity finance into the investments. The policy of issuance of visa on arrival should be accelerated and expanded in scope to boost the inflow of foreign investment and grow the hospitality and tourism sector”, he urged.