The Lagos Chamber of Commerce and Industry has advised the Central Bank of Nigeria to discontinue the official exchange rate of N305 to one United States dollar.
It said that the multiplicity of rates was inimical to economic diversification and urged the apex bank to allow the market to drive the forex rate.
Although the CBN’s official exchange rate on Monday was N306.9 to one dollar, the rate had often revolved around N305 to one dollar.
Responding to an enquiry, the Director-General, LCCI, Muda Yusuf, said the N305/dollar official rate would send negative signals to investors.
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 profound impact on the economy.
He said, “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.”
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.
He said, “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.”