The Managing Director of Cowry Asset Management Limited, Mr. Johnson Chukwu has said that the persistent concern shown for the 41 items denied access to foreign exchange in the official foreign exchange market by the Central Bank of Nigeria (CBN) is over flogging the issue.
Chukwu who made this position know in an interview with Primetime Reporters in Lagos stated that the foreign exchange restriction on the 41 items was not the reason why the Nigerian economy was where it was adding that the only effect it had on the economy was that it had the capacity to widen the gap between the official and parallel market.
According to him,” What I will say is that in a free market economy, you do not restrict sell of FOREX to some items but I think that issue is being over flogged. It is not the reason why we are where we are today. The only effect it has is that it could widen the gap between the official and parallel market but that is not even the reason why we have he wide gap today.
“So, for me, by the time we address the other issue, we might realize that it is not necessary to continue to keep away some products or items from accessing the FX market. The key thing is that we have limited supply of FX, so, we should focus on addressing the sources of supply. The idea of dwelling on the 41 items for me is exaggerated. It is important that we address that issue but it is not the core of our problem”.
On the positive impact of the flexible exchange policy recently put in place by the Federal government on the economy, Chukwu disclosed that a close look at the Federal Allocation to states and local governments for the month of June, one would discover that the allocation for the month of June went up by N550 billion of which N17 billion was attributed to the exchange rate gains which also implied that instead of the original N197 to a Dollar, that the earnings that came in from the crude sales was converted to maybe N283 or N293 to a Dollar resulting to the amount that was available for sharing.
“You will also observe that the tax revenue savings was largely for me, must have had to do with Petroleum profit tax that was also converted at a higher rate. Even the revenue increase from the customs could also be traceable to the rate of exchange that is now used in payment of the customs duty which is now about N282 to a Dollar.
“So, the revision in the exchange rate allowing Naira to adjust is already bringing additional revenue to the government. So, that to some extent will begin to manifest more and more as state governments will be in a position to pay salaries and reflate the economy and when the workers are paid, part of the income will go back into consumption and help boost demand for goods and services”, he said.
On whether or not the flexible FOREX policy should be reviewed as being clamoured for in some quarters, the financial expert had this to say,” For me, I think it will be too early. The key thing like I always say, we need to complement it with some other policies and once the complementarity is achieved, then it will begin to achieve the objective it was designed to achieve.
“It is not a matter of okay, let’s review or go back to where we are coming from, the option we have of going back there is not an option we should have but what we should do is what are the policies we should put in place to complement the policy we already have on ground.
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