Following the Central Bank of Nigeria (CBN)’s introduction of an incentive of N5 for every $1 of fund remitted to Nigeria via International Money Transfer Organisations in line with the Naira4Dollar policy, members of the organised private sector (OPS) have hinted of their support for the move, saying it will attract forex into the manufacturing sector. TAIWO HASSAN reports
Indeed, COVID-19 impacted the nation’s gross domestic growths (GDPs) negatively with its effects still ravaging the environment. Manufacturers across the country under the aegis of Manufacturers Association of Nigeria (MAN) stated that the coronavirus outbreak pushed up both production and distribution costs of products to 31 per cent in the last quarter (4Q) of 2020 from 27 per cent recorded in the third quarter. The major reason for this, according to the local manufacturers, was not being able to adequately source foreign exchange (forex) for importation of raw materials and machinery that are not available locally. Forex squeeze in the country has become higher with 96 per cent of the manufacturing CEOs reporting an increase in production and distribution costs due to prevailing macroeconomic environment and on account of the scourge, which stifled forex inflow into the Nigerian economy.
Amid the forex crisis, MAN President, Mansur Ahmed, had openly said that it was only 40 per cent of its members’ forex application CBN currently meets in the real sector. Following this difficulty, it was gathered that foreign technical partners (suppliers) in China and other developed countries have been forced to blacklist Nigerian firms from accessing raw material inputs for production over defaults. This shows that some manufacturers are still grappling with forex for raw materials for sustainable production in the country. Speaking on the development, a former Managing Director/Chief Executive Officer, May & Baker Nigeria Plc, Nnamdi Okafor, in an interview with New Telegraph in Lagos, lamented that stifling forex crisis due to exchange rate volatility had resulted in China blacklisting Nigerian firms from coming for goods or raw materials.
NACCIMA on CBN
However, with CBN introducing Naira4Dollar policy to boost forex inflow, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), said it was a good idea to allow more forex into the real sector. NACCIMA hinted that it was in total support of the apex bank’s move to push up the country’s Diaspora remittances to go as high as $35 billion by 2023. Its Director-General, Ambassador Ayo Olukanni, in an interview with this newspaper recently, said, indeed, the Diaspora remittances have been identified as important part of inflow of foreign exchange into the Nigerian economy. According to him, the apex bank’s new forex policy is coming at a critical period of Nigerian economy and it is expected to contribute as much as six per cent to the country’s GDP. The NACCIMA DG explained that following the devastating economic trejectory caused by COVID-19, it is ideal and important for the monetary regulator to fine-tune ways and opportunities to grow Nigeria’s fragile economy. Olukanni noted that the country’s apex bank also factored in global economic rebounds following availability of COVID-19 vaccine as strategic options to encourage remittances from the Diaspora.
Also, the Manufacturers Association of Nigeria (MAN) disclosed that the Naira4Dollar scheme was planned to improve forex availability for businesses to reflate the economy. MAN’s Director-General, Mr. Segun Ajayi-Kadir, in an interview with New Telegraph in La-gos, said that the new scheme was yet another intervention of the apex bank that is set against the backdrop of the forex squeeze in the country. 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. He noted that, in addition, the apex bank also introduced the Naira4dollar scheme in a bid not to devalue the naira against the dollar. Ajayi-Kadir explained: “The CBN, probably in a bid to avoid the full blown devaluation of naira, has made several policy statements and issued several circulars, albeit with some flipflops, in the management of the country’s foreign exchange. “CBN had implemented 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 CBN is taking a closer look at forex supply, incentivizing it through diaspora dollar remittances to ramp up supply and help stabilise the forex situation of the country.”
As the OPS fully supports the CBN’s Naira4Dollar scheme, they are, however, urging the apex bank to prioritise the real sector of the economy in forex disbursement in order to quickly reflate the ailing economy