FNCCI JANUARY BREAKFAST MEETING
The Franco-Nigeria Chamber of Commerce and Industry (FNCCI) held its 1st breakfast meeting of 2016 on the 27th of January,2016 at the Eko hotel and Suites. The breakfast meeting, whose theme was NIGERIA FOREX POLICY AND IMPLICATION ON BUSINESSES was put together to dissect the Forex policy of Central Bank of Nigeria (CBN) and address the concern expressed by investors, businessmen and women and also proffer solutions.
The event which began by 9am had in attendance The Commissioner of Industry and Commerce Lagos state; Hon Collins OGUNLEYE(Represented),Mr. Francais WIDMAR; Economic counselor to the French Consulate, Members of the French Consulate, Members of the Business France community, Board members of FNCCI as well as business men and women.
The first presentation was made by Dr Andrew NEVIN(Chief Economist at PWC) on the NIGERIA ECONOMIC LANDSCAPE. By way of statistics and graphs, Dr Nevin highlighted that large levels of public expenditure have opened up a fiscal deficit over the last few years and even projected to rise despite low oil revenues. Another statistics shows that failing oil price has place significant pressure on the exchange rate and the CBN responded by imposing several administrative measures leading to a widening of the official and parallel market rate. The CBN has allowed the Naira to depreciate by 25% since the start of 2014; with foreign exchange reserves failing by 30% over the same period.
Dr Nevin said the fast growing population of the mono-economy nation is responsible for these. He suggested an increase in tax and ensuring tax compliance especially by the big companies would go a long way in relaxing the situation.
Mr Akinsola DAWODU(Zonal Coordinator SMEDAN) made a presentation titled the Effect of Forex Policy on Small and Medium Enterprise. In his presentation he stated that the CBN didn't factor manufacturing process before introducing the Forex restrictions. He stated that the restrictions would further cause inflations as the prices of products will be passed to the final consumers. Mr Dawodu also stated that Nigeria which is an import dependent nation cannot afford to devalue her currency as the country is not producing a product that would attract buyers from other countries and SMEs are not well equipped by the government to produce these products. However, the policy does have its advantages. Some of the advantages mentioned by Mr Dawodu are outlined as follows:
1.Nigeria businesses would be forced to look inward and manufacturers to source raw material internally. 2. Change of direction toward inward revenue generation. 3. Economy will be diversified thereby creating employment opportunity.
Mrs Elvira SALLERES(Managing Partner at Elvira Salleres and Co) in her presentation titled: The legal side of the Nigerian Forex policy pointed out a loophole in the policy. The CBN Act [Section 20 (1)] states that "The currency notes issued by the bank shall be legal tender in Nigeria at their face value for the payment of any amount". Refusal to accept the Naira as a means of payment will attract a fine of N50,000. "Provided the banks shall have powers to prescribe circumstances and conditions under which other currencies may be used as medium of exchange in Nigeria". - S 20 (5).
Mrs Salleras noted that the CBN did not define the legal tender. She also cited a case where "Parties can make an agreement or enter into a contract, to pay in foreign currency and a Nigeria court, can in its discretion award same accordingly" the statement continued by stating that "in international trade public policy demands that goods sold and delivered... should be paid for and that it is not right to make a foreign exporter... to lose out due to technicalities"
The event also featured a panelist/question and answer session presided over by Moses Umoru, Corporate and commercial affairs FNCCI and a journalist from channels television. The panelist comprising of Dr. Nevin Andrews(PWC), Mr.Tayo Ogungbenro(KPMG), Chiefo Ejiofobiri(FIDELITY BANK),Mr. Folin OLivier(PROPACO)and Mrs Elvira Salleras(LEGAL PROFESSIONAL) fielded questions from businessmen and women in attendance.
WRITTEN BY SIMON GZARI AMANANJI(SPEAKPRENEUR CONTENT)