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.”
Meanwhile, the President of MAN, Dr. Frank Jacobs, has 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.
Jacobs said at a media briefing in Lagos on Tuesday that the directive would revive the sector and reflate the economy.
He said, “MAN commends the Federal Government and the CBN on this directive. It is a welcome development and will give fillip to efforts of government aimed at reflating the economy.
“This is an opportunity for the manufacturing sector to determine the exchange rate of the dollar. I will encourage our members not to bid too high, to also understand the power they have today to determine the exchange rate. With 60 per cent allocation, the banks will be willing to sell to manufacturers at a comfortable rate because they cannot keep their dollars.”
IMF Queries FG Strategies On Fuel Subsidy, Unemployment, Inflation
The International Monetary Fund has raised the red flag over Nigeria’s resumption of petrol subsidy payments, describing it as injurious to the economy.
It also reiterated the importance of introducing a market-based fuel pricing mechanism and deployment of well-targeted social safety nets to cushion any adverse impact on the poor.
In a report produced after a virtual meeting with Nigerian authorities from June 1 to 8, the IMF also expressed concerns over the rising unemployment and inflation rates, even as it admitted that real Gross Domestic Product was recovering.
The IMF team, led by Jesmin Rahman, further hailed the Central Bank of Nigeria for its efforts at unifying the exchange rate by embracing needed reforms.
The Fund said: “Recent exchange rate measures are encouraging, and further reforms are needed to achieve a fully unified and market-clearing exchange rate.
“The resurfacing of fuel subsidies is concerning, particularly in the context of low revenue mobilisation.
“The Nigerian economy has started to gradually recover from the negative effects of the COVID-19 global pandemic. Following sharp output contractions in the second and third quarters, GDP growth turned positive in Q4 2020 and growth reached 0.5 percent (y/y) in Q1 2021, supported by agriculture and services sectors.
“Nevertheless, the employment level continues to fall dramatically and, together with other socio-economic indicators, is far below pre-pandemic levels. Inflation slightly decelerated in May but remained elevated at 17.9 percent, owing to high food price inflation. With the recovery in oil prices and remittance flows, the strong pressures on the balance of payments have somewhat abated, although imports are rebounding faster than exports and foreign investor appetite remains subdued resulting in continued FX shortage.
“The incipient recovery in economic activity is projected to take root and broaden among sectors, with GDP growth expected to reach 2.5 percent in 2021. Inflation is expected to remain elevated in 2021, but likely to decelerate in the second half of the year to reach about 15.5 percent, following the removal of border controls and the elimination of base effects from elevated food price levels.”
The IMF also recognised that tax revenue collections were gradually recovering but noted that with fuel subsidies resurfacing, additional spending for COVID-19 vaccines and to address security challenges, the fiscal deficit of the Consolidated Government is expected to remain elevated at 5.5 percent of GDP.
Nigeria-South Africa Trade Hits $2.9bn
The volume of trade between Nigeria and South Africa hit $2.9 billion last year with expectation of it rising further with the African Continental Free Trade Area (AfCFTA) agreement.
Nigeria’s Consul General, Malik Abdul, in a statement noted that Nigeria accounts for 64 per cent of South Africa’s trade in West Africa and is one of his country’s top three sources of crude oil.
He further added that in 2020, South Africa imported R35 billion ($2.48 billion) worth of goods, predominantly crude oil from Nigeria and exported R6 billion ($425milion) to Nigeria.
He stated: “South Africa is currently among the top 10 per cent of investors in Nigeria, globally and Nigeria is South Africa’s 10th biggest export market in Africa and thirty-second globally. Nigeria accounts for 64 per cent of South Africa’s trade with West Africa and is one of South Africa’s top three sources of crude oil.
“Also, Nigeria in 2020 was South Africa’s top import market in Africa and sixth globally, after China, Germany, USA, India and Saudi Arabia. Over the past year, South Africa imported $2.48 billion worth of goods predominantly crude oil from Nigeria and exported $425 million worth to Nigeria.”
Also, the consulate said his embassy issued a total of 10,341 passports to Nigerian citizens in South Africa between March 2020 and May 2021.
The consul general further said the Mission had 404 unclaimed passports, and advised all those whose passports were processed and pending from August 2020 to come for collection.
Abdul added that the consulate was working to clear all COVID-19 lockdown backlog of applications, urging members of the public to exercise patience while the mission was resolving the backlogs.
On the re-introduction of administrative fees and charges for lost passports, Abdul said that the step was taken to harmonise and standardise consular services following approval from the Ministry of Foreign Affairs, Abuja.
The Mission had increased the fees for lost passports from R1,500 to R2,000, and admin charges of R120 for data capturing.
“On this issue, the Mission could not unilaterally impose any charges without headquarters’ approval or consent.
“The admin fees of R120 pertains to all services rendered by the two Missions,” he said.
According to the Nigerian envoy, the decision was taken to remove disparities in all consular services, noting that visa fees have also been harmonised.
On penalty for lost passports, Abdul disclosed that 484 Nigerian passports were reported missing at the mission between August 2020 and May 2021 with request for re-issue.
Abdul said it was discovered that there were criminal undertones and immigration rules infractions associated with the ‘so-called’ lost passport declarations.
“In line with practice in other Missions, there was a need to impose fines to deter people from engaging in such infractions.
“At such an astronomical rate of loss declarations, the option will be to refer such losses to Nigeria for processing.
“This will save the booklet for genuine requests of re-issue and thereby reducing the backlog and pressure on the Mission,” the envoy said.
Abdul disclosed that the consulate had received a directive to embargo processing of lost passports pending further instructions from the headquarters.
The consul general then accused some Nigerian groups in South Africa of, “peddling lies and outright falsehoods” against the Mission and his person.
“These disgruntled elements have gone ahead to incite fellow Nigerians with intent to sabotage the Mission.
“Moreover, a lie and falsehoods often repeated amounts to a propaganda which can be misinterpreted by the gullible and undiscerning as truth,” he said.
NNPC Engages Gas Producers to Improve Power Supply
The Nigerian National Petroleum Corporation (NNPC) has started engaging gas producers across the country in an effort to boost gas supply to power generation companies (Gencos) and subsequently improve electricity supply.
Mr. Yusuf Usman, the Chief Operating Officer, Gas and Power, NNPC, disclosed this in Lagos during his tour of Egbin Power Plc facility on Monday.
Usman, who responded to concerns raised by the Chairman of Egbin Power Plc, Mr. Temitope Shonubi, said the company’s concern on gas supply and transmission restrictions had been noted, adding that the corporation would support it to ensure constant power supply.
“I have listened to all the concerns you raised. An area of concern to me is when you talked about the gas constraints. We are going to support you to make sure that the power supply is steady. We are having a session with gas suppliers in this regard.
“I am aware that works are ongoing in this regard to ensure that all the power we generate is safely evacuated,” Usman said.
Usman, however, said he was impressed by the level of progress being recorded by Egbin, noting that the effort of the company’s management to effect turnaround maintenance at the company through overhaul of the entire system, was commendable.
Usman added: “The visit has been an eye opener for me. We have seen turbines that have been running for over 40 years. We have seen efforts being made by Egbin management to effect a turnaround at the plant through overhaul of the entire system.
“We have also seen the support you have been given to the youths through employment and capacity development opportunities.”
Shonubi, in his remarks, said Egbin Power was planning to increase power generation by 1,900 megawatt.
Shonubi said: “Egbin has 1,320MW capacity. As at the time we took over, the plant was generating 300MW which is abysmal 22 per cent. As at today, our generation capacity has surged and we do 89 per cent.
“We have reached the highest peak of 970MW and we are working hard to ensure sustainability of this feat.
“The 970MW we hit is the highest recorded this year and based on our core value of sustainability, we are working round the clock to make sure that we sustain the gains, which we have made.”
Business4 weeks ago
End Of The Road For Internet Explorer As Microsoft Pulls The Plug
Cryptocurrency3 weeks ago
Can cryptocurrency survive regulators? Here’s what Ripple CEO says about XRP’s future
News4 weeks ago
Akeredolu Replies Malami, Open Grazing Ban in South Is Irreversible
Ethereum4 weeks ago
Ethereum Closes In on Long-Sought Fix to Cut Energy Use Over 99%
Telecommunications4 weeks ago
Nigerians To Submit Phone IDs In Three Months says NCC
Cryptocurrency3 weeks ago
BankDhofar Launches Mobile Banking Payments from Oman to India with RippleNet
Social Media4 weeks ago
Facebook Africa Launches ‘Made by Africa, Loved by the World’ Ahead of Africa Day
Education2 weeks ago
Senate Passes Bill To End HND/BSc Discrimination