Image

MANUFACTURERS ASSOCIATION OF NIGERIA ADDRESS THE CBN NEW POLICY ON FOREX ALLOCATION TO BDCs

The Manufacturers Association of Nigeria (MAN) have expressed their concerns regarding the Central Bank of Nigeria policy on Forex Allocation to BDCs.


The exchange rate has an impact on the manufacturers in Nigeria , this is because manufacturing across sub-sectors is heavily dependent on importation of raw materials.


Most of the machines and spare parts manufacturers use are imported.


However, a favourable exchange, a case of appreciation of the Naira, no doubt, would present good development and improves manufacturing production. 


Unfortunately, the case has been the consistent depreciation in value of the Naira as observed in the various forex crises. 


It's important that we note that the forex crisis in which the Naira value depreciates among convertible currencies such as the US Dollar strangulates and reduces the size of manufacturing in the country. 


This is because depreciation in Naira value causes manufacturing raw-materials and machinery imports to be more expensive. 


The high-cost import bills for the productive inputs decreases manufacturing working capital and feeds into manufacturing commodities prices, thereby making the sector less competitive.


READ ALSO: THEATRE COMMANDER OF OPERATION HADIN KAI VISITS HEADQUARTERS OF SECTION TWO AREA, URGES TROOPS TO REMAIN FOCUSED


It cannot be overemphasized that COVID-19 majorly triggered the recent forex crisis through low international commodity prices, particularly crude oil prices.  


The acute shortage of forex and the all erosion in Naira parity has been nightmarish to manufacturers in the country.  


In a recent survey during the last quarter of 2020, most CEO of manufacturing companies reported inability to adequately source forex for importation of productive raw-materials and machinery that are not available locally. 


A major challenge with forex allocation to BDC segment is that the operators always lacked the ability and will to continuously adhere to set guidelines.


Most times their operations drift into round-tripping and other financial incongruities which negates the overall objectives of creating the BDC forex market.  


The end result was always the escalation of the premium of forex in BDC compared to the Official window and further depreciation of the Naira.


Perhaps the history of BDC forex market may have the answer to this challenge. The truth is that most operators in the market  came from the so called “Black market”. Unfortunately, the inappropriate modus operandi in the Black Market followed these operators to the BDC, even with CBN’s regulation.


MAN had made various submissions on the need for the CBN to collapse the various forex windows into a single official forex window.  


They believe that a single forex window will eliminate the excesses of middlemen, safe the value of Naira and allow for available forex to be allocated productively using the official banking protocols. 


Consequently, with the new policy, manufacturers will depend solely on the Interbank market for their forex needs.  


MAN hopes that the banks will provide a seamless process and timely execution of forex application by manufacturers.


In the face of the new policy, it is imperative that the available forex policies and guidelines should be appropriately reviewed to support manufacturing.


Lastly, the issues of usage of Forex’, exclusion of items from the official forex window and  concessional forex allocation to critical manufacturing should be reviewed to ensure a production enabling forex management in the country.


For the latest Updates from Eons Intelligence, Follow us on twitter @eonsintelligenc and on Facebook, Eons Intelligence. You can also connect with us on our LinkedIn Page, Eons Intelligence



Comments


This is Rising!

  • Notice (8): Trying to access array offset on value of type null [ROOT/plugins/EonsNews/src/Template/Pages/details.ctp, line 159]" alt="Image" />

    Notice (8): Trying to access array offset on value of type null [ROOT/plugins/EonsNews/src/Template/Pages/details.ctp, line 169]/details/news-108923456/">
    Notice (8): Trying to access array offset on value of type null [ROOT/plugins/EonsNews/src/Template/Pages/details.ctp, line 170]

  • Image

    FIRST BANK CRISIS: CBN WIELDS THE BIG STICK

  • Image

    1000 IDPS RETURN HOME TO BAGA JUST AS BOKO HARA...

  • Image

    CHINA DENIES MASSIVE MILITARY PRESENCE IN NAMIBIA

  • Image

    NEW ISWAP LEADER APPOINTS STRATEGIC COMMANDERS...

  • Image

    THE ENDSARSNOW PROTEST AND THE NIGERIAN YOUTH

  • Image

    MARITIME STAKEHOLDERS RENEW CALLS FOR SECURITY ...

  • Image

    DOES MESSI HAVE TO WIN THE WORLD CUP TO BE CONS...

  • Image

    WOMAN ACCUSES MIGOS RAPPER, TAKEOFF OF RAPE

  • Image

    INCOME TAX: FEDERAL GOVERNMENT MAKES U-TURN, SA...

  • Image

    FCT POLICE RAIDS BANDITS' HIDEOUT, RECOVERS EXH...

Join WhatApp Group