New Telegraph

MAN: CBN’s naira4dollar to curb forex squeeze

Manufacturers Association of Nigeria MAN

The Manufacturers Association of Nigeria (MAN) has described Central Bank of Nigeria (CBN)’s policy on foreign exchange codenamed “Naira4dollar,” as a positive step to curbing further devaluation of the local currency and also reflate the economy.

MAN’s Director-General, Mr. Segun Ajayi-Kadir, who disclosed this to New Telegraph in Lagos, said that the new scheme was yet another intervention of the apex bank set against the backdrop of forex squeeze that was aggravated by fall in oil prices and COVID-19 since the first quarter of 2020. According to him, the forex squeeze has been a big issue in the country’s economy for local manufacturers in the course of importing raw materials for production of goods. Ajayi-Kadir explained: “The CBN, probably in a bid to avoid full blown devaluation of naira, has made several policy statements and issued several circulars, albeit with some flip-flops, in the management of the country’s foreign exchange.

“The CBN had implement ed measures that focused on addressing the downturn in dollar inflow by constraining forex demand, including the list of some items not valid for forex, which we indicated negatively impacted some of our sectors.

“This latest measure suggests that the CBN is taking a closer look at forex supply, incentivising it through diaspora dollar remittances to ramp up supply and help stabilize the forex situation of the country.” On what CBN would do, the MAN’s director-general said: “I believe that the CBN will work with the IMTOs and the deposit money banks to deal with the remittance infrastructure challenges, as well as the cost. “In the face of it, the scheme should encourage Nigerians working abroad to remit more into Nigeria, thereby improve the forex inflow.

“However, we need to dimension the inflows, which has historically been 70 per cent for family support and 30 per cent for other purposes, including real estate, which carries the greater part.” In order to yield more of the anticipated inflow for investment in productive activities, Ajayi-Kadir explained that CBN would have to work with the banks and other relevant government agencies to initiate portfolios and measures to point the remitters in that direction. “Having said that, there is also the need to consider where the domestic foreign exchange earners stand within the context of this scheme.

“For instance, could a manufacturer, who exports his product and repatriates his dollar profit,get his money in dollars and also benefit from the scheme? “This way, you can guarantee almost a 100 per cent reinvestment in production and reap all the attendant benefits and even partly make-up for the losses incurred as a result of the poor implementation of the EEG. “The average manufacturer who is confronted with a lot of infrastructure and macroeconomic challenges is eminently qualified, if not more qualified, to benefit from such a scheme.”

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