Charges CBN to de-emphasize portfolio inflows
Association of Bureaux De Change Operators of Nigeria (ABCON) has called on the federal government to suspend all increases in taxation and tariffs until the economy recovers from the impact of the COVID-19 pandemic.
The Association made this call in its Quarterly Economic Review report for the second quarter of the year (Q2’2020).
While commending the recent decision to suspend the proposed hike in electricity tariff, ABCON urged that the same decision should be extended to proposed increases in taxation and tariffs, stressing that shortfalls in the budget as a result of the suspension should be covered with COVID-19 related donations.
“Most importantly, government should as a major policy during this COVID-19 recovery period suspend any imposition or increase in taxation instead such shortfalls that might have emerged between national budget adjustments and expenditures should be covered by various financial support to COVID-19 from foreign and local contributors. In line with this observation, all current increases on in tariffs and taxes could be deferred until when the economy recovers from the effects of the pandemic,” the Association stated.
ABCON also called for actions to minimize disruptions in the food chain noting that, “The lockdown and the consequent effects have been in Nigeria for about four months now in various states of the federation. One of the evident consequences of COVID-19 crisis is the potential to trigger a food security crisis in Nigeria, with agricultural production potentially contracting between 2.6% in an optimistic scenario and up to 7% if there are trade blockages according to a World Bank survey.
“Thus, there should be more emphasis on saving lives and protecting livelihoods through strengthening health systems and taking quick actions to minimize disruptions in food supply chains. There should also be faster implementation of social protection programs, including cash transfers, food distribution and fee waivers, to support citizens, especially those working in the informal sector.”
In the same vein, the Association has called for a paradigm shift in the foreign exchange market with the Central Bank of Nigeria (CBN) focusing on to supply side management from demand side management. In this regard, ABCON President, Aminu Gwadabe said: “The CBN should look beyond the portfolio inflows, which adds to the public debt, and seek stable and germane sources of foreign exchange.
“The present unification of exchange rate should also be supported by new techniques and redefined trade policies particularly to mismatch import duties where duties on raw materials are sometimes higher than imported finished goods.”
ABCON also stressed the need to open up the remittances market to allow more operators, especially BDCs, so as to increase access points, drive down the cost of remittances services for customers and also enhance financial inclusion across the country.
“Opening up the remittance market generates competition among remittance payment operators. This is an important factor for the development of the market because it helps to keep the costs of these services low for consumers, helps increase access points, promote product innovation, and can ultimately contribute to greater financial inclusion. Lack of necessary inclusion makes a good volume of the flow into Nigeria’s system to go into the unofficial market sector,” it stated.
While noting that the entrance of BDCs to the remittances market is imminent, ABCON however challenged BDC operators to train and equip their outfits so that they can render competitive and effective remittance services.