Manufacturers and other private sector operators
on Tuesday painted a gloomy picture of how the foreign exchange restriction
placed on 41 items by the Central Bank of Nigeria had affected operations in
the business sector.
They
said that since the restriction order was placed last year, about 272 firms had
been forced out of business, 50 of which were manufacturing companies.
While
some of the affected manufacturers have relocated to neighbouring countries,
according to Manufacturers Association of Nigeria, at least 222 small-scale
businesses have closed shops, leading to 180,000 job losses.
As
a result of the negative impact of the policy on the operations of
manufacturers, stakeholders in the economy including MAN, the National
Association of Small and Medium Enterprises and the Lagos Chamber of Commerce
and Industry insisted that the policy must be reviewed.
They
spoke 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
Director, Economics and Statistics, MAN, Mr. Ambrose Oruche, lamented the
unavailability of productive inputs, stating that this was the major challenge
confronting manufacturers.
He
attributed the problem largely to the ban by the CBN on certain items from
acessing the official window of the forex market, adding that the current
operating environment was too harsh for many manufacturers to continue to
operate.
He
wondered why the CBN and the Federal Government kept coming out with what he
described as conflicting polices, noting that this was affecting the growth of
the manufacturing sector.
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.”
Oruche
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.
He
also listed high interest rates, poor power supply, policy inconsistency, poor
patronage of locally manufactured products, poor supporting infrastructure,
among others, as the challenges confronting manufacturers.
In
his remarks, the Director, Research and Advocacy, LCCI, Mr. Vincent Nwani, said
the CBN announced the ban on the 41 items without consulting other stakeholders
in the sector.
He
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.
He
said, “Local production of oil palm is put at about 600 metric tonnes annually,
but the total demand in the country is put at about 1.8 million metric tonnes.
“Today,
Presco Oil has orders of up to December 2017 to fill, it is presently hard
pressed with demands. Listing oil palms among the restricted items meant that
we have a shortfall of about 1.2 million metric tonnes.
“Some
of the items placed on the restriction list by the CBN should be reinstated
until the country develops the capacity to produce them locally. Some of the
items need a period of between three and seven years for the country to develop
self-sufficiency in their production.”
Nwani
said, currently, about $10bn of manufacturers’ funds were stuck in foreign
countries because the owners had no confidence in the economy.
He
said, “We have about $10bn stuck in one country or the other earned by our
members. Some of them are not manufacturers; some are agriculturists or
merchants of different products.”
Tags
Politics