Nigerian Manufacturers Worry over CBN’s Forex Policy

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Frank Jacobs

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The Manufacturer’s Association of Nigeria is worried that the Central Bank of Nigeria’s foreign exchange policy will cripple businesses as its members are unable to import raw materials to sustain production

THE Manufacturers Association of Nigeria, MAN, has expressed fears that many of its member companies will close down production by the end of the first quarter of this year as a result of scarcity of raw materials. Frank Udemba Jacobs, president, MAN, said since the introduction of foreign exchange restrictions policy by the Central Bank of Nigeria almost eight months ago, their members find it difficult to import their raw materials.

“The recent policy statement of the Central Bank of Nigeria, CBN, has not really augured well for manufacturers. To an extent, we seem to agree with the reasons behind the decision of the CBN, mainly the dwindling crude oil price in the international market but sometimes, the policy seems to be like throwing the child out along with the bath water, in the sense that our members’ raw materials could not be purchased or sourced,” he said.

The policy denied them foreign exchange to import their raw materials and the concern is that before the end of this quarter, it is possible that many of these companies will be out of business because by then, they would have run out of their raw materials because of the change in the policy from the CBN.

Jacobs, in an interview with the Vanguard, said the recent statement by the CBN that money deposit banks could now receive foreign exchange into domiciliary account of customers is a cheering news to manufacturers. He said this new policy would enable smaller industries to transfer money in order to buy their raw materials. “The decision to stop the funding of the foreign exchange is again a good decision. It’s a step in the right direction.

“We are hoping that same funds that are saved should be channelled into the productive sector by allowing the real sector to get their foreign exchange to import their raw materials, which is one of their major challenges. We are also faced with the challenge of change in government because normally when government is changed like it happened in Nigeria last year, it takes a long time for new policy thrust of the new government to come out especially with the long delay in the appointment of the cabinet, all those things throw the economy into a state of uncertainty for a very long time and it becomes difficult for my members to predict the economy to be able to plan their businesses. So those are some of the challenges we have even though we all know that the issue of infrastructure decay has always been there because we can’t really produce at competitive price if you don’t have power and power has been very unstable and very unreliable among other issues that have been affecting the manufacturing sector.”

He noted that diversification will work if the attitude of Nigerians change to buying made in Nigeria products, not to see products produced in the country as inferior, even though they don’t meet up to the standard. He said Nigerians should be patriotic to grow its local products because at the end of the day, for each imported product Nigerians buy, they are exporting employment while Nigerians are dying of poverty and unemployment.

—  Mar 7, 2016 @ 01:00 GMT

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