CBN rules out terminating foreign exchange restriction policy

Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, yesterday vowed to sustain the policy on foreign exchange prohibition to raise domestic capacity, protect growing companies and create employment.

Speaking at the BusinessDay Post-Election Economic Agenda Conference in Lagos, the top banker reiterated the need to diversify the revenue base of the Federal Government and reduce dependence on direct proceeds from crude oil sales.

Reading a reply to a letter dated August 30, 2018 and addressed to the tomato growers and processors’ association by the Nigerian Customs, requesting total ban on tomato concentrate and paste, he noted that there had been no positive development.

“The forex prohibition policy is to make local production competitive and sustain it as an alternative. Those who want to make here a dumping ground are still at large. When we make policies, we must work hard to make them a success,” he said.

Emefiele ruled out reducing the 14 per cent interest rate for now in view of the apex bank’s post-election agenda that has projected a rebound in inflation to 12 per cent.

Cautioning that the issues that led to the economic crisis of 2015 to 2017 were still very much around, the CBN boss urged vigilance to domestic and global developments and increase of the country’s policy buffers, including fiscal measures and external reserves.

The governor said the bank would sustain its development interventions by ensuring cheap financing to boost local production of priority goods in critical sectors of the economy as anti-dote to reliance on importation.

However, the Nigeria Employers’ Consultative Association (NECA) and the Head of Tax and Corporate Advisory Services at PwC Nigeria, Taiwo Oyedele, have cautioned against increasing Value Added Tax (VAT) from five to 7.5 per cent as being proposed by government.

Addressing a forum yesterday in Lagos, NECA’s Director-General, Timothy Olawale, said the proposed rise coming just after approval of a new national wage of N30,000 would have far-reaching implications for the economy.

He argued that apart from weakening the purchasing power of workers, an increased VAT would impact negatively on manufacturers and businesses currently struggling for capacity utilisation.

To Oyedele, “contemplating an increase in VAT rate now is bad timing and inconsistent with current economic realities. VAT increase will lead to higher inflation, interest rate hike, more unemployment and generally make people poorer.”