ABCON CALL FOR SUSPENSION OF TAXES, TARRIF HIKES

• Urges CBN to minimize portfolio inflows

Association of Bureaux De Change Operators of Nigeria (ABCON), has called on the Federal Government to suspend all increases in taxes and tariffs until the economy recovers from the impact of the COVID-19 pandemic.

 The Association made this call in its Quarterly Economic Review 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 the proposed increases in taxes, stressing that shortfalls in the budget as a result of the suspension should be covered with COVID-19-related donations.

ABCON said: “Most importantly, the government should as a major policy during this COVID-19 recovery period suspend any imposition or increase in taxes. Instead, such shortfalls that might have emerged between national budget adjustments and expenditures should be covered by various financial supports to ease COVID-19 impacts from foreign and local contributors.

 “In line with this observation, all current increases in tariffs and taxes could be deferred until when the economy recovers from the effects of the pandemic.”

 ABCON also called for actions to minimize disruptions in the food chain, noting that one of the evident consequences of COVID-19 is the potential to trigger a food security crisis in Nigeria, as agricultural production could contract between 2.6 per cent in an optimistic scenario, and up to seven per cent if there are trade blockages according to a World Bank survey.

They maintained that more emphasis should be made on saving and protecting livelihoods through strengthening health systems, and taking quick actions to minimize disruptions in the food supply chains.

 They called for faster implementation of social protection programmes, including cash transfers, food distribution, and fee waivers to support citizens, especially those working in the informal sector.

 Similarly, the Association has called for a paradigm shift in the foreign exchange market with the Central Bank of Nigeria (CBN), focusing on the supply side management rather than the demand-side management.

In his remarks, 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.

 He said the present unification of the exchange rate should also be supported by new techniques and redefined trade policies, particularly to correct the mismatch in 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, to increase access points, drive down the cost of remittance 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,” the Association stated.

 While noting that the entrance of BDCs to the remittances market is imminent, ABCON, however, charged BDC operators to train and equip their outfits so that they can render competitive and effective remittance services.