Manufacturers and other private sector
operators on Tuesday painted a gloomy picture of how the foreign
exchange restriction placed on 41 items by the Central Bank of Nigeria
had affected operations in the business sector.
They said that since the restriction
order was placed last year, about 272 firms had been forced out of
business, 50 of which were manufacturing companies.
While some of the affected manufacturers
have relocated to neighbouring countries, according to Manufacturers
Association of Nigeria, at least 222 small-scale businesses have closed
shops, leading to 180,000 job losses.
As a result of the negative impact of
the policy on the operations of manufacturers, stakeholders in the
economy including MAN, the National Association of Small and Medium
Enterprises and the Lagos Chamber of Commerce and Industry insisted that
the policy must be reviewed.
They spoke at the launch of a report on
the manufacturing sector by NOI Polls Limited, in collaboration with the
Centre for the Studies of Economies of Africa.
The Director, Economics and Statistics,
MAN, Mr. Ambrose Oruche, lamented the unavailability of productive
inputs, stating that this was the major challenge confronting
manufacturers.
He attributed the problem largely to the
ban by the CBN on certain items from acessing the official window of
the forex market, adding that the current operating environment was too
harsh for many manufacturers to continue to operate.
He wondered why the CBN and the Federal
Government kept coming out with what he described as conflicting
polices, noting that this was affecting the growth of the manufacturing
sector.
He said, “Presently, about 50
manufacturers have closed shop, while some have downsized. Some
manufacturers are still producing due to their love for this country.
Government’s policy on cement should have been adopted in this case.
“In the case of cement, Nigeria used to
be a net importer of cement, but the government set up a policy over a
five-year period, which made it possible that today, we are a net
exporter of the commodity.”
Oruche said the fact that the economy
was technically in recession should have made the CBN to redirect its
policies towards stimulating the economy rather than tightening money
supply.
He also listed high interest rates, poor
power supply, policy inconsistency, poor patronage of locally
manufactured products, poor supporting infrastructure, among others, as
the challenges confronting manufacturers.
In his remarks, the Director, Research
and Advocacy, LCCI, Mr. Vincent Nwani, said the CBN announced the ban on
the 41 items without consulting other stakeholders in the sector.
He said, “We did press releases; we did
stakeholders engagement; we engaged with the CBN at all levels, at least
three times; we met the directors twice up to the CBN governor on this
same matter of the 41 items- giving them examples of product-by-product.
“There must be an urgent review of the
CBN’s policy on the restriction of access to foreign exchange placed on
41 items, as about 16 of the total items on the list serve as critical
raw materials for intermediate goods produced in Nigeria, especially as
the country lacks the capacity for optimal production of the items.”
For instance, he said that the ban on
oil palm alone had led to a loss of about 100,000 jobs over the last
couple of months, while the ban on glass and glassware resulted in
80,000 job losses mainly in the pharmaceutical industry.
Nwani said many companies in the pharmaceutical sector now found it difficult to package their products.
He said, “Local production of oil palm
is put at about 600 metric tonnes annually, but the total demand in the
country is put at about 1.8 million metric tonnes.
“Today, Presco Oil has orders of up to
December 2017 to fill, it is presently hard pressed with demands.
Listing oil palms among the restricted items meant that we have a
shortfall of about 1.2 million metric tonnes.
“Some of the items placed on the
restriction list by the CBN should be reinstated until the country
develops the capacity to produce them locally. Some of the items need a
period of between three and seven years for the country to develop
self-sufficiency in their production.”
Nwani said, currently, about $10bn of
manufacturers’ funds were stuck in foreign countries because the owners
had no confidence in the economy.
He said, “We have about $10bn stuck in
one country or the other earned by our members. Some of them are not
manufacturers; some are agriculturists or merchants of different
products.”
Meanwhile, the President of MAN, Dr.
Frank Jacobs, has lauded the recent directive of the Central Bank of
Nigeria that 60 per cent of foreign exchange allocation should go to the
manufacturing sector. The association is also confident that with such
powers, manufacturers may determine exchange rate in the country.
Jacobs said at a media briefing in Lagos on Tuesday that the directive would revive the sector and reflate the economy.
He said, “MAN commends the Federal
Government and the CBN on this directive. It is a welcome development
and will give fillip to efforts of government aimed at reflating the
economy.
“This is an opportunity for the
manufacturing sector to determine the exchange rate of the dollar. I
will encourage our members not to bid too high, to also understand the
power they have today to determine the exchange rate. With 60 per cent
allocation, the banks will be willing to sell to manufacturers at a
comfortable rate because they cannot keep their dollars.”
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