- 60% Forex Allocation to Manufacturers Poorly Implemented
The Manufacturers Association of Nigeria has faulted the implementation of the Central Bank of Nigeria’s directive on 60 per cent forex allocation to manufacturers, describing it as very poor.
The President of the association, Dr. Frank Jacobs, stated this in Lagos on Thursday during the MAN Annual Media Luncheon.
MAN, Kwara and Kogi branch also on Thursday urged the Federal Government to boost industrialisation of Nigeria through good policies.
In August last year, the Central Bank of Nigeria had directed banks to allocate 60 per cent of their total forex purchases from all sources (interbank inclusive) to manufacturers and 40 per cent to other users for the purpose of trade and other obligations.
The move was aimed at ameliorating the forex challenges faced by manufacturers who needed to purchase critical raw materials for production processes.
But Jacobs said the 60 per cent allocation had not been forthcoming from the banks, resulting in manufacturers turning to the parallel market for dollars while others had shut down operations completely.
He said commercial banks had refused to comply with the directive on the basis of the fact that they were not getting dollar allocations from the CBN.
“The banks say that if the CBN has given them dollars and directed them to allocate 60 per cent to manufacturers, they will do that, but they will not allocate 60 per cent of the forex they have sourced independently.
“Most of our members have been buying dollars from the black market, making their products very expensive and less competitive than ever.”
According to him, the advocacy programmes of the association have achieved a lot in the past year, resulting in some of the friendly policies that the Federal Government had initiated in recent times to favour the manufacturing sector.
He added that the advocacy programmes would continue in 2017, noting that the association would keep advocating a review of some of the policies that were constituting challenges to the sector, such as the inclusion of critical raw materials in the CBN’s list of 41 items restricted from forex; development of Nigeria’s abundant natural resources for industrial input; enactment of relevant manufacturing capacity utilisation to meet local and export market demands as well as concessionary interest rate of five per cent for manufacturers.
Meanwhile, the Chairman of the branch, Alhaji Kamaldeem Yusuf, who spoke with journalists in Ilorin, the Kwara State capital, also stated that there would be no economic and national development without a strong indigenous manufacturing base.
He added that the Federal Government should give priority to indigenous manufacturers.
Yusuf, who is also Chief Executive Officer of KAM Industries
Nigeria Limited, warned that it would be detrimental to national development not to encourage industrialisation.
He warned against policy summersault, which could discourage investment in industrial sector.
He said, “When the government during the former administration of former President Goodluck Jonathan said it wanted Nigeria to be one of the most industrialised nations in the world, it made a law to increase capacity in cold rolling mill, by that time, there were only three players but before the end of this year, there would be about 10 players.
“Manufacturers borrowed heavily to do the project. Now, the government came up with ECOWAS tariff and crashed the duties of cold roll from 45 per cent to 15 per cent. They failed to protect the industry. It is now easier to import it than to manufacture it.
“What is the hope for all the industrialists that took loans and invested to make the policy real? Policy summersault is something that will not make Nigeria move forward. Government should consider the impact.”
He also urged the government through the Central Bank of Nigeria to reduce interest rates on loans to manufacturers.
According to him, banks should make loans accessible and at reasonable interest rates to genuine manufacturers.
He stated that one of the big mistakes that the present government was making was enriching financiers while manufacturers were being wrecked.