Members of the Organised Private Sector (OPS), including Manufacturers’ Association of Nigeria (MAN), have disagreed with the Central Bank of Nigeria (CBN) that they received $2.83 forex.
The apex bank announced penultimate Thursday that it had disbursed $2.83 billion for utilisation in the critical sectors of the economy between December 2016 and January this year.
CBN’s spokesman, Isaac Okoroafor, listed manufacturing, raw materials and agriculture, among others, as beneficiaries of the disbursements targeted at strengthening the economy.
But OPS faulted the claim, saying that their inability to access forex has forced some of their members out of business.
The OPS insisted that manufacturers could not have been the sole beneficiary of the $2.83 billion, if indeed such funds were disbursed, as the other sectors of the economy would have been major partakers in the largesse.
In the breakdown, Okoroafor had said the CBN released $609 million and $228 million for raw materials in December and January, while manufacturers got $53 million and $71 million during the same period.
The CBN spokesman said the forex utilisation indicated that $1.839 billion and $0.989 billion respectively were extended to critical sectors.
The OPS however said, “Forex allocations have been marred with alleged irregularities. Only prominent manufacturers allegedly have access to forex. Thousands of thousands were forced to shut down their businesses and relocate to neighbouring countries”.
MAN has been critical of the forex policy and the ban on 41 items classified as raw materials that could be sourced locally, contending that such policies was not only hurting its members but the economy.
Other hurdles the manufacturers said that are being faced with include power instability, security challenges and multiple taxation, all of which, it said, pushed up production costs in the country.
MAN President, Dr. Frank Udemba Jacobs, who faulted the CBN position on the controversial $2.83 billion allocation said it was incorrect for the CBN to claim to have allocated such funds to manufacturers.
According to him, the regulator ought to have explained how the $2.83 billion was shared to beneficiaries in the past two months.
Responding to the accusation of round tripping levelled against some manufacturers and how the association could monitor the ultilisation of the forex allocated to them, the MAN president said the allegation was baseless.
He wondered how manufacturers, who do not have enough forex for the importation of raw materials and machinery, could be accused of round tripping.
Jacobs said, “Any trader with connection can claim to be a manufacturer and have access to forex when the real manufacturers are starved of it. The government should therefore do more work in this area to identify those who are really into manufacturing from traders”.
On why the naira value continued to collapse, the MAN chief blamed the free fall of the local currency against the dollar on failure to adequately fund forex. He described the liquidity in the forex market as very low.
Jacobs declined to comment on Erisco Foods’ allegation against the CBN, saying that he could not speak for any of the parties.
He, however, noted that the apex bank claimed to have given the company some funds for the importation of raw materials and equipment for their local production.
Also, the Director-General of the Lagos Chamber of Commerce & Industry (LCCI), Mr. Muda Yusuf argued that the CBN should be blamed for the alleged round tripping by ‘manufacturers’.
According to him, the regulator incentivised the illegality, thus making it attractive for those who may be engaged in it.
Yusuf said, “The black market rate for the dollar as at today (weekend) is N460 to a dollar. What the bank should do is to close the gap with the official rate which hovers around N300 to make round tripping unattractive if indeed it is happening. The disparity between the official and black market rate created incentive for round tripping.
“Anybody can claim to be a manufacturer. What the CBN should do is to allow the market to determine the rate and value of the naira. Some government policies are also hurting the economy. For instance, people should be allowed to bring in their forex freely without restrictions.
“The government has placed a lot of hurdles on the path of portfolio investors and Foreign Direct Investment (FDI). There is no way we can come out of the economic problems behoving the nation except there is a review of some of these hurtful policies.”
Large Arbitrage Cause Of Corruption In Forex Market – Osinbajo
Meanwhile, Vice President Yemi Osinbajo said yesterday that there was bound to be corruption in the land due to the the arbitrage in the forex exchange which is so large.
Osinbajo stated this when he met with a delegation of lawmakers from the House of Representatives in his office to discuss the economy and possible ways of navigating Nigeria out of recession.
The federal legislators who called on the Vice President are members of the Tactical Committee on Recession from the House of Representatives led by their chairman, Dr. Bode Ayorinde.
A statement by the VP’s spokesman, Laolu Akande, noted that it was a visit that promoted cordiality and progressive synergy between the National Assembly and the Presidency. Budget and National Planning Minister, Senator Udoma Udo Udoma was also at the meeting.
“How many people will get this kind of opportunity we have to lead? The opportunity to serve is one that must be taken seriously and used for the common good”, Osinbajo said.
Addressing the bane of corruption and its attendant abnormality in matters of development, the Vice President said, “It is in our interest to deal with corruption, this is not moralising, it is an existential threat, it a survival issue. We need to address the fundamentals of that abnormality. If we do not address it, no matter what we say, things won’t work.
“I think it is very important, especially for us who are in Government today either as legislature or executive. We have to address this issue, it is a fundamental issue; everywhere in the world, even where they do not have the problems we have, they are addressing the issue.
“So we must address it and, it is everywhere; look at foreign exchange and you can identify the problems, you fix the rate of foreign exchange at the rate it is and you know what the black market is, look at the arbitrage which is so large; there is bound to be corruption, it is impossible for there not to be corruption”.
He, however, offered hope that the monetary and fiscal policies were being alligned, adding that “we are constantly in discussion with the CBN, discussing on how to reduce interest rates”.
The Vice President, in response to issues of revenue allocation raised by the visiting legislators noted that emphasis must shift from ‘sharing’ to generating more revenue internally, including in the states.
He also assured that the federal government was actively exploring options on how best to liquidate the debts owed contractors across the country, including the option of using bonds.
Speaking on behalf of the legislators, Dr. Ayorinde said some of their areas of concern include the foreign exchange policy and its impact on manufacturing, calling for a review.
He said the Tactical Committee was ready to interface with the Economic Management Team, even as he commended the team for all its efforts to revamp the economy, including the recently released Economic Recovery and Growth Plan.
Earlier, the Vice President chaired a meeting of the National Innovation and Research Council attended by several ministers from the Ministries of Science & Technology, Budget & Planing, Education and Justice. Representatives of the Manufacturers Association of Nigeria (MAN) were also in attendance.
Source: Leadership
