CBN Forex Allocation Inadequate, Say Manufacturers

Steel Manufacture At Evraz Plc West-Siberian Metallurgical PlantCooling water spays onto a length of red hot steel as it passes through the rolling mill at the Evraz Consolidated West-Siberian Metallurgical Plant, operated by Evraz Plc, in Novokuznetsk, Russia, on Tuesday, Nov. 24, 2015. Photographer: Andrey Rudakov
  • CBN Forex Allocation Inadequate, Say Manufacturers

Manufacturers have described the $567.31m allocated to the industrial sector by the Central Bank of Nigeria in the month of January as a drop in the ocean.

The President, Manufacturers Association of Nigeria, Dr. Frank Jacobs, said this in an exclusive interview with our correspondent.

The CBN had stated in a statement on Thursday that it disbursed $2.83bn for importation of various types of equipment to the real sector of the economy between December 2016 and January 2017.

Providing a breakdown of the allocation, the Acting Director, Corporate Communications Department, CBN, Mr. Isaac Okorafor, stated that $609m and $228m were released for raw materials’ importation in December and January, adding that the manufacturing sector got $53m and $71m for raw materials, respectively in the period.

Jacobs told our correspondent that the CBN had informed him of the disbursement of $567.31m to the manufacturing sector in January, but described the amount as a drop in the ocean, adding that it was too small.

Our correspondent, however, learnt that the allocations from the apex bank for the months of December and January did not go round. Most of the manufacturers said they did not get any forex in the months in question.

In the automotive sector, the Chairman, Nigeria Automotive Manufacturers Association, Mr. Tokunbo Aromolaran, said his firm did not get any forex, adding that he did not know if others got.

Aromolaran, who remarked that a situation where somebody asked for $1m and got $100,000 could not be termed as forex allocation, wondered how far $1bn could go to satisfy the needs of all the manufacturers in the country.

In the food processing sector, the General Manager, Erisco Foods, Mr. Adetokunbo Agbede, stated that the firm had not received allocation from the CBN in the past eight months, alleging that forex was being allocated to importers of frozen foods.

However, a few of the industrialists admitted that they got some forex, but said the amounts were nothing compared to what they needed.

“It was minimal compared to what we got in the past,” the Chairman, Pharmaceutical Manufacturing Group of MAN, Mr. Okey Akpa, said.

Jacobs, however, said although the amount was too small, the fact that the CBN was making the forex available was helpful.

He said, “It is good that something is coming. Since they had it in January and December, that means they are making it more regular. If they can continue that way, people will continue in business. Problem arises when they cannot get the forex at all.

“If they are given a little, they can cut down their production and still remain in business instead of shutting down completely. “

The Managing Director of Coleman Wires and Cables, Mr. George Onfowokan, who said his firm got some forex, remarked that even though the amount was not much compared to the demand, the fact that the CBN was now responding with regular interventions was a positive sign and had made positive impact on the few firms that benefitted from it.

He stated, “It has restored confidence in the banking sector, because some of the banks have started opening up their credit lines for their customers based on anticipation of the next intervention.

“The CBN should continue to make the interventions regular. If they do that, even some of the people that did not get will eventually get.”

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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