41 exempted items: FG dumps CBN’s forex policy

Emma Ujah, Abuja Bureau Chief
THE   Federal   Government is set to abolish the policy of the Central Bank of Nigeria, CBN,   regarding the 41 items exempted from foreign exchange market in its newly released   2017 Fiscal Policy Roadmap

The policy document prepared by the Minister of Finance, Mrs. Kemi Adeosun, will, instead, come up with fiscal measures to reduce pressure in the parallel market.

According to the document, the FG “will replace administrative measures on list of 41-items with fiscal measures to reduce demand pressure in parallel market.”

Presenting the document at the session, which was attended by captains of industry across key sectors of the economy, including oil, banking and telecoms, Mrs. Adeosun said “The Federal Government’s Fiscal Roadmap is addressing barriers to growth that will drive productivity, generate jobs and broaden wealth-creating opportunities to achieve inclusive growth”.

She stated that the President Muhammadu Buhari administration was determined to return Nigeria to a productive economy rather than one steeped in consumption.   To do so, government would tackle the infrastructure deficit to unlock productivity, improve business competitiveness and create employment.

She further said that government would actively partner with the private sector to achieve this by use of a number of new funding platforms, including the Road Trust Fund, which would develop potentially tollable roads, and the Family Homes Fund, which is an ongoing PPP initiative for funding of affordable housing.

According to the minister, the tax provision that allows companies to receive tax relief for investment in roads on a collective basis would be reviewed. She explained that the existing provision that enabled companies to claim relief for road projects had only been taken advantage of by two companies, Lafarge and Dangote Cement. This was because few companies were large enough to fund roads alone.

Buhari and Emefiele
The revision would now allow collective tax relief, such that companies will be able to jointly fund roads, subject to approval by FIRS and the Ministry of Works, and share the tax credit. It added that the government would revitalise refineries and increase Diaspora remittances through participation in the buyer support scheme for the Family Homes Fund with a view to increasing the supply of   US Dollars to the Nigerian market.

The Roadmap also provides for a fresh audit of the federal government debt profile after which it would introduce a promissory note program to finance verified liabilities and issue debt certificates to contractors of Ministries, Departments and Agencies (MDAs).

These, according to the document, would positively impact on the economy by improving government’s cash flow of businesses, improve banks’ Non-Performing Loans, (NPLs); free up banks’ balance sheet for lending to private sector; and improve business interaction.

These liabilities were estimated to be N2.2 Trillion and would be addressed with a 10 year Promissory Note Issuance programme in conjunction with the CBN.

“Some contractors had not been paid in the past 4 years and in some cases the banks they were owing refused them access to the funds released, causing delays,” she explained, adding that those receiving the Promissory Notes would be expected to provide a material discount to government. The issuance was a solution to a long term problem that was ‘a drag on economic activity’.

It would also mobilise private capital to complement government spending on infrastructure, through the Roads Trust Fund, Family Homes Fund, while extending infrastructure tax relief to a collective model to attract clusters of corporate entities and expand the provision of infrastructure, in other to drive growth of non-oil sector, especially and the economy in general.

There would be incentives for exports which would include restructuring the Export Expansion Grant (EEG) to a tax credit system, as well as rationalised