The apex bank has rescued hundreds of manufacturing companies in Nigeria by making available foreign exchange for the purchase of imported raw materials for production.
The Central Bank of Nigeria, CBN, has averted the closure of over 200 companies in the manufacturing sector of the economy through its recent allocation of foreign exchange to the affected industries to bring in their raw materials, according to the Vanguard.
Recall that the apex bank had in a bid to stabilise the exchange rate, in protection of foreign reserves, following oil price decline, excluded 41 products from access to the foreign exchange market (interbank foreign exchange market and Bureau de Change).
This led to inability of some manufactures to sustain production due to lack of Forex to import raw materials. Consequently, Manufacturers Association of Nigeria, MAN, cried out three months ago that if the dollar scarcity persists, an estimated 200 of its members out of the 1,600 surviving companies would close down their operations by the end of the first quarter of 2016.
With the first quarter over, Dr. Frank Jacobs, MAN President, said: “The good news is that CBN has started allocating forex to manufacturers. Thought, it is not exactly what we want but it is better than none. Some weeks ago, we had challenge in getting some forex, so I had a meeting with the CBN Governor, Godwin Emefiele.
“At the meeting, he promised that he was going to make sure that manufacturers’ requirements are met although he said he cannot guarantee their requirements will be met 100 per cent. After the meeting with the CBN Governor, I met with MAN members and conveyed the message that their requests are being attended to and they are happy that although that is not exactly what they want but that they are happy that something is happening. I am very happy about where we are today and we hope the CBN will sustain that effort,” he said.
According to him, it was the outcome of their public outcry that led the CBN Governor to have a meeting with “’Me. When he saw the reports, we discussed at length and he promised that he would ensure that manufacturers’ requirements are met.”
Fielding question on the way forward, he noted: “Yes, the way forward is we are happy at present our requirements are being met, and our prayer is that it should be sustained so that we can together grow the economy.
He stressed that although, the current allocation of forex to manufacturers is not able to satisfy their demand 100 per cent, but at least it is better than nothing.
“We are happy that at least CBN is sensitive to our needs now even though they are not able to give us 100 per cent access pending the time when the forex improves, and when the price of oil goes up and foreign reserve improves.
Like Oliver Twist, in order to satisfy our raw materials requirement, actually, we want hundred per cent of the requirements because when you apply for $100,000 but you were given $50,000 dollars, it means that your production is going to be cut into half and cutting your production into half would mean that you won’t be able to work the numbers of hours you are supposed to work in a day. That is why we are hoping that with time they should be able to give us everything we want. So we are happy that something is coming that when nothing was coming at all.
He disclosed that in order to cut down on dependence on imported raw materials for production, MAN is in discussion with the Raw Materials Research and Development Council, RMRDC.