New Telegraph

Form M: MAN seeks policy reversal from CBN

Despite supporting the Central Bank of Nigeria (CBN)’s position on import restriction, the Manufacturers Association of Nigeria (MAN) has advised the apex bank to reverse the recent policy banning unauthorized dealers from opening Forms ‘M’ for importation in the overall interest of the manufacturing sector and the economy in general.

The association referred to the circular released by the apex bank to ensure prudent use of foreign exchange resources and eliminate incidences of over invoicing, transfer pricing, double handling charges and avoidable costs that are ultimately passed to the average Nigerian consumer.

President of MAN, Engr. Mansur Ahmed, while acknowledging the good intention of the apex bank, however, said the impact of such decision was inimical to the survival of many manufacturing concerns that are not involved in any unethical practices, especially at this time the nation is implementing phased ease on lockdown. Ahmed said: “We believe that this additional hamstring on the economy is likely to erode the recently improved performance on ease of doing business ranking.

“MAN wishes to draw the attention of the apex bank that most manufacturers, especially SMEs, deal with accredited agents for their supplies as many Original Equipment Manufacturers (OEMs) abroad do not sell directly to individual buyers.” The MAN president explained that it was in line with global best practice for OEMs and large international manufacturing companies operating in multiple countries and with sourcing needs in various jurisdictions to leverage the economics of scale to secure lower prices through centralised procurement.

In Nigeria, he said that central procurement played a critical role in the production process, and that the absence of same would hamper manufacturers operating in the country and may result in factory shutdowns. “In the absence of a global procurement agency, most companies would not have access to the final suppliers, who consider the inherent country risks a disincentive for trading directly with companies in Nigeria.

“The procurement agencies have provided a vital interface between the final suppliers and the manufacturers, and allows same extended payment timelines by granting credit in periods of foreign currency scarcity. “It is pertinent to point out that many companies have gone into contractual agreements via the procurement agencies for the 2020 financial year and in some cases beyond. Default on these contractual obligations may result in expensive lawsuits across jurisdictions, bring disruptions to the production process and further undermine the resilience of the manufacturing sector.

“Consequently, the multiplier effect on the economy will be reduction in productivity; loss in business revenues; supply chain disruption and ultimately loss of employment,” he noted. MAN, however, recommended that if the CBN is of the view that the audit of the activities of a central procurement agency in terms of price verification was impossible, a phased approach should be adopted to the elimination of their use in Nigeria.

This, according to the association, will enable companies have sufficient time to reorganise and build the required relationships with original suppliers which they do not currently have. Similarly, to checkmate abuse, the apex bank can put in place a monitoring mechanism framework to ensure that unverifiable claims by some manufac-turers are identified and dealt with accordingly rather than stifle the business of genuine manufacturers whose interest and commitment is to grow the economy.

“Given the prevailing extremely stressful operating environment our fragile manufacturing sector is contending with, the implementation of this new directive is like hammering the last nail on the coffin of many of our ailing members,” Ahmed stated.

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