LCCI faults Nigeria’s FX policy, $1.5bn Port Harcourt refinery rehabilitation

THE Lagos Chamber of Commerce and Industry (LCCI) has criticised the Central Bank of Nigeria (CBN)’s management of the foreign exchange (FX) market and the $1.5 billion fund mapped out for the rehabilitation of Port Harcourt refinery, saying both are unsustainable for a country in dire need of growth.

In a statement made available to The ICIR on Thursday, President of the LCCI  Toki Mabogunje said lack of FX cohesion among policymakers was sending a negative signal to the investment community, worsening uncertainties in the economy and dampening investor confidence.

“It is important for the fiscal authorities, CBN and Economic Advisory Council to be on the same page as far as the country’s foreign exchange policy framework is concerned,” Mabugunje said.

Toki Mabogunje, LCCI President

The CBN has maintained multiple exchange rate windows, frustrating investors’ expectations of a transparent FX market.

Investors are unable to make projections in the Nigerian economy due to the CBN’s reluctance to harmonise the various widows, including the Investors  & Exporters’ Window, NAFEX, Parallel Market, among others.

The International Monetary Fund (IMF) has warned Nigeria to maintain a single window to make FX available, but the apex bank has ignored the advice.

Mabogunje said Nigeria’s FX policy framework needs to be reviewed to expand the scope of market mechanism in the determination of exchange rate, stressing that  policymakers must harmonise the multiple exchange rates into a single market-reflective rate.

“This is imperative in strengthening investor confidence and engendering macroeconomic stability,’ she said.

“Unification of exchange rates would complement recent efforts by the CBN geared at enhancing liquidity at the supply segment of the foreign exchange market. Ensuring clarity on the country’s foreign exchange policy direction among participants in the investment environment is even more imperative in attracting private investments into the economy.”

She explained that many investors in the economy, including those in the real sector, were lamenting the difficulties in accessing FX for importation of raw materials, equipment and critical inputs for production and processing – in spite of  recovery in crude oil prices.

She contended that the situation was a taking a huge toll on capacity utilisation, business turnover and profitability of businesses, noting that the  sustainability the investments were at risk with dire implications for jobs.

Port Harcourt refinery
Credit: The Punch

On the $1.5 billion being mapped out for Port Harcourt refinery, she said it was ill-advised.

“While we appreciate government’s resolve in revamping these facilities, we do not consider the approval as economically and fiscally expedient given the fact that billions of dollars have been expended on turnaround maintenance over the years with no tangible results.”



    “The Chamber believes the refineries should be concessioned to private investors with government taking a minority stake. Such funds should be invested in critical infrastructural projects that would further stimulate economic development in the country,” she recommended.

    The ICIR has done an expert financial analysis of the plan to pump $1.5 billion on the refinery and found it ill-advised and financially imprudent. In 2019, for example, the refinery did not record any revenue.  Yet, it reported N25.19 billion in expenses. Six directors collected N59.65 million in fees, meaning that each of them received an average payment of N9.94 million a month in 2019 from a company that recorded no revenue.

    In 2019, total liabilities were estimated at N529.544 billion while assets stood at N93.31 billion.

    In 2018, total liabilities were put at N399.96 billion whereas assets stood merely at N14.265 billion. In 2017, assets were valued at N26.004 billion while liabilities stood at N365.97 billion.

    Join the ICIR WhatsApp channel for in-depth reports on the economy, politics and governance, and investigative reports.

    Support the ICIR

    We invite you to support us to continue the work we do.

    Your support will strengthen journalism in Nigeria and help sustain our democracy.

    If you or someone you know has a lead, tip or personal experience about this report, our WhatsApp line is open and confidential for a conversation


    Please enter your comment!
    Please enter your name here

    Support the ICIR

    We need your support to produce excellent journalism at all times.

    - Advertisement


    - Advertisement