The Nigerian-British Chamber of Commerce (NBCC) has asked the Federal Government to adequately fund small businesses in 2016 in order to achieve price stability and increase aggregate output in the Nigerian economy.
According to the chamber, the Federal Government should, in the face of distortions in the economy, develop policies that will enhance accessibility of foreign exchange for critical goods.
Dapo Adelegan, president of the NBCC, who said this while analysing a review of the Nigerian economy done by the chamber, advised the government to ease
foreign exchange policies to boost foreign investor appetite in the economy.
According to Adelegan, government needs to adopt Import substitution mechanisms to reduce the demand for foreign exchange in the country.
With a six trillion naira budget for 2016, he explained that borrowing plans might require some foreign exchange depreciation to attract foreign capital to fund the federal government’s spending plans.
Adelegan said the recent restriction of 41 items from accessing foreign currency by Central Bank of Nigeria had resulted in reduction in trade relations, loss of jobs
and rise in exchange rate in the country, noting that Nigeria had recorded only about $1.35 billion in Foreign Direct Investment (FDI),nearly 40 percent less than the figure, in 2014.
He said a worse situation had been recorded for investments in financial assets, where huge sell-offs had been seen, stressing that foreign investors’ confidence had dropped as a result of the forex policies, with JP Morgan removing Nigerian Bonds from its index.
“The Nigerian economy has been growing at a slower pace, having recorded an average growth rate of 3.05 percent in 2015,” he said.
“The weak growth rate is largely attributed to low global crude oil price, which is the mainstay of the nation’s economy (90 percent of export and 70 percent of revenue). Official exchange rates are not reflective of current market positions; significant amounts of foreign exchange flows occur outside the regulated window,”Adelegan stated.
He pointed out that inflation rate had remained stable, around 9.3 percent in the last quarter in spite of low GDP growth, adding that the demand for Nigerian assets with low FDI and portfolio investment- as reflected in the capital market- had continued to drop.
Adelegan, who was recently inaugurated as the 14th president of NBCC in Lagos, however, reaffirmed the commitment of the chamber to fostering trade relations between Nigeria and the United Kingdom.
