MAN: Banks Flouting CBN’s Directive on 60% FX Allocation to Manufacturers

• We’re working with FG to safeguard naira value, Says CBN

Crusoe Osagie and Obinna Chima in Lagos

The Manufacturers Association of Nigeria (MAN) has expressed concern over the non-implementation of the Central Bank of Nigeria’s (CBN) directive to banks in the country to allocate 60 per cent of their foreign exchange (FX) to manufacturers.

MAN said manufacturers were yet to access the much-needed FX to boost operations in the real sector of the economy.

The president of MAN, Dr. Frank Jacobs said yesterday that most of its members were still dependent on the parallel market to source for their FX requirements, which he said had forced several of its members to close shop or reduce capacity utilisation.

According to the MAN president, banks had refused to implement this policy since the central bank was yet to make FX available at the interbank market, stressing that the banks source FX through alternative means.

He said: “Implementation has been very poor. We had a meeting with the CBN governor where he said there was a directive to banks to allocate 60 per cent of the FX to manufacturers, but after engaging them we were told they source for FX from alternative sources and not from the CBN, so the central bank cannot decide who they must make FX available to.

“Government should make more FX is available if it really wants the 60 per cent allocation to manufacturers to materialise.”

The MAN boss, during his annual media lunch, also expressed concern over the recent trade liberalisation agreement signed by the federal government, saying that Nigeria was at a disadvantaged position due to its harsh and unfriendly operating environment for businesses.

He called on the government to improve the business environment for manufacturers to compete effectively in the global market.

He also called on the federal government to recapitalise the Bank of Industry (BOI), adding that the institution does not have the capacity to meet the needs of the manufacturing sector.

He said in consonance ‎with its mandate, the association would pursue some strategic issues on its advocacy radar, including significant improvement in infrastructure, especially power and transport; campaign for patronage of made-in-Nigeria products using multiple platforms; general improvement in the business operating environment; and the abolition of multiple taxation and unorthodox modes of collection.

He added that MAN was also calling for the review of the CBN’s ban placed on 41 items not valid for FX at the interbank market to enable manufacturers source critical raw materials that are not available locally; enactment of relevant manufacturing-friendly laws and abrogation of adverse and obsolete business related legislations; improvement of manufacturing capacity utilsation to meet local and export market demand; and continuation of the advocacy for a concessionary interest rate of 5 per cent for manufacturers.

But as manufacturers groaned under the weight of FX scarcity and refusal by banks to meet their FX demands, the CBN yesterday said it was working assiduously with the fiscal authorities to preserve the country’s foreign reserves and safeguard the value of the naira.

The central bank which said this in a statement signed by its acting Director, Corporate Communications, Isaac Okorafor, said it had observed with great concern the continued and unwarranted attack on its policies by a group of Nigerians, whose real interest, it alleged, was anything near altruistic, but rather self-serving and unpatriotic.

The CBN said while it respects the rights of every Nigerian or stakeholders to their respective views, it found it curious that certain interests had remained persistent in their effort to misinform the larger public, “with the intention of discrediting genuine efforts at managing the economy, thereby creating panic within the financial system”.

Though the CBN was silent on the “interests” it was referring to, however, the National Leader of the All Progressives Congress (APC), Chief Bola Tinubu, on Wednesday in Abuja strongly criticised the CBN’s monetary policies, which he said were stifling businesses and the larger economy.

CBN said intelligence reports at its disposal revealed the involvement of some influential interests funding the push to have the CBN and the federal government reverse its FX policy aimed at conserving foreign exchange and promoting exports.

“As the Bank has explained severally, its decisions on FX management was prompted by the challenge the country’s reserves suffered at the time, arising from issues such as speculative attacks and round tripping.

“It is pertinent to note that pressure on the country’s foreign reserves persisted due to a huge fall in the monthly foreign earnings, which fell from over $3.2 billion to as low as $400 million at a time when the demand for the US dollar, particularly by importers, continued to rise considerably.

“In spite of that challenge and the basic economic fact that countries earn dollars from international trade, the CBN ensured it met the genuine demands of customers to pay for eligible imports and other transactions within available resources.

“Furthermore, the Bank has continued to ensure that there is liquidity and transparency in the FX market,” it added.

It assured Nigerians as well as other stakeholders that it would continue to ensure that inflation remains within manageable limits; intervene in critical sectors of the economy, through the injection of much-needed capital to promote growth and employment; promote export-driven industrialisation; provide access to credit to farmers and small scale entrepreneurs at single digit rates, to create wealth; and protect the interest of bank customers in Nigeria.

“Despite our positive efforts, some have chosen to play to the gallery by focusing on negativity that does the country no good. Nevertheless, in line with its mandate, the CBN, working with the fiscal authorities, will continue to ensure monetary and price stability as well as maintain external reserves to safeguard the international value of the naira.

“While leaving its doors open for partnership with all its stakeholders, the CBN will only take economic decisions that will impact positively on the lives of all Nigerians.

“It therefore urges all concerned to be more patriotic and contribute to the soundness of the Nigerian economy; rather than engage in acts capable of undermining the efforts being made at moving the country out of the current economic situation,” it added.