The foreign exchange restriction placed on 41 items by the Central Bank of Nigeria (CBN), has adversely affected operations in the business sector.
According to manufacturers, since the forex restriction order was placed last year, about 272 firms had been forced out of business, 50 of these, were manufacturing companies.
On Tuesday, August 23, at the launch of a report on the manufacturing sector by NOI Polls Limited, in collaboration with the Centre for the Studies of Economies of Africa, the Manufacturers Association of Nigeria (MAN) said most of these companies have relocated to neighboring countries, at least 222 small-scale businesses have closed shops, leading to 180,000 job losses.
As a result of the negative impact of the forex policy, stakeholders in the economy including MAN, the National Association of Small and Medium Enterprises and the Lagos Chamber of Commerce and Industry are insisting that the policy must be reviewed.
Mr Ambrose Oruche, the Director, Economics and Statistics of MAN, lamented the unavailability of productive inputs, stating that this was the major challenge confronting manufacturers.
He said the problem was largely due to the ban by the CBN on certain items from accessing the official window of the forex market, adding that the current operating environment was too harsh for many manufacturers to continue to operate.
He said: “Presently, about 50 manufacturers have closed shop, while some have downsized. Some manufacturers are still producing due to their love for this country. Government’s policy on cement should have been adopted in this case.
“In the case of cement, Nigeria used to be a net importer of cement, but the government set up a policy over a five-year period, which made it possible that today, we are a net exporter of the commodity.”
He also said the fact that the economy was technically in recession should have made the CBN to redirect its policies towards stimulating the economy rather than tightening money supply.
Mr Vincent Nwani the Director, Research and Advocacy, LCCI, said the CBN announced the ban on the 41 items without consulting other stakeholders in the sector.
He also said: “We did press releases; we did stakeholders engagement; we engaged with the CBN at all levels, at least three times; we met the directors twice up to the CBN governor on this same matter of the 41 items- giving them examples of product-by-product.
“There must be an urgent review of the CBN’s policy on the restriction of access to foreign exchange placed on 41 items, as about 16 of the total items on the list serve as critical raw materials for intermediate goods produced in Nigeria, especially as the country lacks the capacity for optimal production of the items.”
For instance, he said that the ban on oil palm alone had led to a loss of about 100,000 jobs over the last couple of months, while the ban on glass and glassware resulted in 80,000 job losses mainly in the pharmaceutical industry.
Nwani said many companies in the pharmaceutical sector now found it difficult to package their products. Dr Frank Jacobs, the President of MAN, however lauded the recent directive of the Central Bank of Nigeria that 60 per cent of foreign exchange allocation should go to the manufacturing sector. The association is also confident that with such powers, manufacturers may determine exchange rate in the country.
