To avoid the prolonged effect of illiquidity in the foreign exchange market on the real sector, the Chairman NASCO, Mr. Attia Nasreddin has charged the Federal Government to develop a framework to ensure liquidity in the market by restoring investors’ confidence in the economy.
According to him, 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.
Attia Nasreddin 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 journalists, Nasreddin 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.