Importers of processed vegetable and poultry products, tooth pick, eggs and other items restricted by the Central Bank of Nigeria (CBN) from its foreign exchange window have actually been indirectly creating jobs for foreign countries in the past. The restriction was introduced in 2015 to support the naira after it was hammered by a fall in oil prices. The policy has, however, led to the closure of plants in various sectors, as some manufacturers are unable to import raw materials or spare parts needed to stay in production. It was gathered that 95 of the affected items are raw materials not locally available.
Last week, the apex bank, having maintained its position on the restriction, however, noted that only importers of items classified as “ineligible for forex” with transactions value of $20,000 and below per quarter only qualified for allocation, subject to completion of form Q.
The 41 items
Some of the items restricted by the apex bank include rice, cement, margarine, palm kernel/palm oil products/ vegetables oils, meat and processed meat products, vegetables and processed vegetable products and poultry chicken. Also included are eggs, turkey, private airplanes/jets, Indian incense tinned fish in sauce, cold rolled steel sheets, galvanized steel sheets, roofing sheets, among others.
Statistics by the Manufacturers Association of Nigeria (MAN) revealed that over 200 factories had been short down within the space of two years due to inability to secure foreign exchange to import the necessary raw materials for production. The association noted that the restriction had been harmful, stressing that there were 95 raw materials which could not be found in the country
According to the Director General of MAN, Mr. Segun Ajayi-Kadir, “there are 680 tariff lines in the 41 items restricted by the CBN from receiving forex at the official window.” He said: “Our members are unable to source raw materials at exchange rate that will allow them to produce for profit. He noted that it was wrong to deny any manufacturing industry the materials required to produce its goods. Ajayi-Kadir argued that if the CBN had consulted widely, importers of raw materials would have been able to avoid a situation where raw materials were probably inadvertently included in that list. He stressed that MAN would have given CBN many more products. that would have been on the list of items which the manufacturers would not need to buy forex to obtain.
The director general said that one of the ways out of recession was to remove some items from tariff line listed on the 41 items. Ajayi-Kadir said that the items should be taken out from the list in order to protect the ailing manufacturing sector from total collapse. He noted that MAN had been trying to engage the Federal Government and the CBN on the issue, saying that the restriction has had more negative impact on the industry.Ajayi-Kadri explained that if forex was not locally available or not in the right quantity, the impact would be detrimental to manufacturers and workers.
The director general stressed the need for the government to provide a conducive and friendly operating environment for manufacturers to operate. “An environment that is not conducive is like taking the fish out of water,” he said. Also, Mr John Aluya, Chairman, Corporate Affairs and Logistics/ Strategic Planning Committee of MAN, noted that maritime sector was important to manufacturing because most raw materials were imported. He said:
“The ease of getting our raw materials is important to us. There is a slow pace of cargo clearance, which is affecting the cost of doing business and Nigeria is not alone in this league.” There is need for manufacturers and the CBN to address the challenges identified in the items restricted from the forex policy.