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Forex squeeze hits manufacturing sector

MAN: Funds available to only 40% operators

 

Nigerian manufacturers under the umbrella of Manufacturers Association of Nigeria (MAN) have raised the alarm over severe scarcity of foreign exchange (forex).

 

Following the trend, it was gathered that they now operate at half capacity. President of MAN, Engr. Mansur Ahmed, told New Telegraph in Lagos that just over 40 per cent of manufacturing firms were currently having access to forex under stringent policy guidelines put in place by the Central Bank of Nigeria (CBN) for importation of critical manufacturing machinery and raw materials. Ahmed stated that nonaccess to forex by his members had put local manufacturing on edge with severe implications.

 

He pointed out that getting forex for raw materials and machines for production had become tighter than before, saying that no one could blame the apex bank and government for the problem, which came as a result of drop in price of crude oil. Besides, the MAN president noted that the new forex policy, which has    punctured easy access to forex, was brewing uncertainty with regard to meeting production capacity. Ahmed explained that no single manufacturing company was getting the actual amount of forex it applies.

 

He said: “Yes, the forex guidelines and policy from the CBN is obviously having significant impact on the manufacturing sector. I cannot tell you the percentage of total access to forex for local manufacturers currently because it changes from company to company.

 

“First, it depends on what you are asking for and depending on what you are spending the forex on. “That determines the amount to be given to you. You could recall that the CBN had identified the number of priority inputs that it is willing to provide forex for. It has identified a number of items that it would not provide forex for.

 

“The whole process is that significant number of demands for forex is not being met and I can only assume at this stage that the figure or percentage that is not being available is over 40 per cent, which, of course, means that manufacturers cannot get the fund they require to keep their operations in full capacity.”

 

With the matter yet to be resolved, he pointed out that members of the organised private sector had met with the apex bank and government about the situation. He, however, alluded to the fact that part of the reasons for scarcity of forex had to do with oil price slump and loans for infrastructure projects.

 

With these issues in place, Ahmed disclosed that government had been stressed beyond meeting up manufacturers’ demands for forex.

 

According to him, “I believe this is something we have drawn the CBN’s attention to. This time around, we have discussed with government even in a recent meeting we had with them.

 

Obviously, we discussed with government extensively on forex and we must understand that part of the reasons for scarcity has to do with several reasons. “First of all, oil price, which is the basis or major factor for foreign exchange, has significantly declined over the years.

 

“Second, we are all aware of the loan that government has procured to boost infrastructure development. These loans have to be sourced and they have to be sourced in foreign exchange.

 

“So there is no doubt that government is very stressed in terms of how much foreign exchange it is able to make available to the industrial sector

 

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