Manufacturers Raise Alarm Over Forex Scarcity
Manufacturers have raised the alarm that they are finding it difficult to access foreign exchange at the commercial banks to fund the importation of machinery and equipment
The difficulty is traced to the scarcity of forex at the banks which the body said has created another problem for manufacturers who are now unable to repay the foreign exchange components of the intervention from the Central Bank of Nigeria (CBN).
This currently is stifling the manufacturing sector according to the members of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture,(NACCIMA), who have now cut down on operations owing to unavailability of raw materials, a factor attributed to the increase in the price of goods in the market.
The National President of NACCIMA, Ide John Udeagbala, in an interview recently said the members comprising private sector operators, manufacturers and MSMEs have lodged a series of complaints at the Chamber’s Secretariat over the challenge in sourcing forex which has adversely impacted their operations.
Scarcity of forex has hit the economy harder since the CBN halted the sales of the commodity in July this year to the Bureau De Change (BDC) operators, over allegation that the parallel market has become a conduit for illicit forex flows and graft.
The apex bank which ordered the banks to dedicate tellers for sale to those in need has since been selling foreign exchange directly to commercial banks weekly, while it also stopped the process of applications for BDC licences in the country.
“We are concerned that BDCs have allowed themselves to be used for the graft,” stated Godwin Emefiele, the Governor of the CBN who also accused international bodies, including some embassies and donor agencies of being complicit in illegal forex transactions that have hindered the flow of foreign exchange into the country.
He said the organisations have chosen to channel forex through the black market than use the official Investors and Exporters (I&E) window, called Nafex, warning that the apex bank will “deal ruthlessly” with any bank that allows illegal forex dealers to use their platforms and as well, report the defaulting international organisations to their regulator
Udeagbala explained that access to forex is a concern for NACCIMA members especially those who have accessed CBN interventions to fund the importation of machinery and equipment.
“They are currently faced with a major challenge of repayment of loans, as there is no window of provision to cover the foreign exchange component of such interventions”.
“The commercial banks who bid fortnightly for FX are only allocated small percentages of the bidding amount”, stated Udeagbala who urged the CBN to provide a special window for foreign exchange when providing these loan interventions for Nigerian businesses henceforth.
Some NACCIMA members after their feasibility analysis had applied for CBN loan interventions to enable them to import machinery to boost production when the exchange rate was at N370 to $1.
However, between the time the loans are approved and up to the time these machines are fabricated, the exchange rate has shot up by almost 40 per cent, thereby increasing the cost of these machines, and making it almost impossible for businesses to pay back these loans owing to the loss incurred because of the change in the exchange rate.
Udeagbala feared that many Nigerian businesses won’t be able to pay and service CBN intervention funds at the commercial banks unless government and the CBN find a lasting solution to the problem of rocking FX shortage in the real sector of the economy.
Source: insidebusiness.ng
