Jolted by the imminent collapse of the manufacturing industry over scarcity of dollar in Nigeria, the Central Bank of Nigeria (CBN) has agreed to provide foreign exchange, worth $700m, to save the sector.
The sum is however $300 million short of the $1 billion that the sector recently requested for sourcing raw materials.
The apex bank, which announced this after a closed door meeting with officials of the umbrella body for the sector on Wednesday, stated that it would be working more with the real sector, adding that the approved forex can only be accessed through the inter-bank market.
It will be recalled that due to lack of raw materials and spare parts for industrial purposes, caused by paucity of dollars, the Manufacturing Association of Nigeria (MAN), at its October 2016 meeting, had raised the alarm that about 50 per cent of its members were about to close shop.
The Association’s cry for help was intensified when Erisco Company Limited, a tomato and food processing firm threatened pulling out of Nigeria to Kenya, a development which was said to have jolted the CBN.
But MAN President, Dr, Frank Jacobs, while appreciating CBN’s gesture stated that for the assistance to be worth the effort, the apex bank should find an immediate solution to high interest rate and spiral inflation that are working against the manufacturing industries.
However, the CBN Director, Corporate Communications, Mr. Isaac Okorafor, said that the new arrangement of assisting the real sector to source dollar was in line with CBN’s promise to ease foreign exchange pressure on manufacturers and the agricultural businesses.
“This,” he stated, “will be a process that will have demanded for foreign currencies provided through forward sales as a new flexible Forex regime.”
Some manufacturers said the measure was coming a little bit late, because more than 10 big and medium-sized companies had already reduced their production capacity to less than 40 per cent since February 2016.
“Nigeria has already lost close to $10bn investment, including the $200m that Erisco Foods Limited had regretted losing from its foreign partners in the same period,” said Eriscos Chief executice office, Mr. Eric Umeofia.
He said that his company was winding down its 450,000 tonnes tomato plant, sacking 1,500 workers and moving its operation out of Nigeria.
Most of the affected firms blamed the CBN’s restrictions on the sourcing of Forex for 41 items from the inter-bank market, as the factor that had greatly affected local manufacturers.
By Emma Eke….