… As MAN bemoans N500bn loss to CBN’s policy
By Omodele Adigun
The Central Bank of Nigeria (CBN) yesterday released the names of 1,342 companies that accessed its foreign exchange in September.
The list posted on its website Thursday night shows that 23 banks and International Money Transfer Organisations (IMTOs) disbursed over $660.17million during the month to import raw materials, plants and machinery.
Recall that CBN recently said that manufacturing industries in the country have accessed foreign exchange valued at over $660 million in the inter-bank Market to source raw materials and spare parts for their industries through the interbank foreign exchange market.
According to industry sources, the move by the CBN is in line with its earlier promise to ease the foreign exchange pressure on manufacturing and agricultural businesses through forward sales under the new flexible Foreign Exchange regime.
Details indicated that the sum sourced by the manufacturers was to facilitate the procurement of raw materials for agricultural, pharmaceutical, automobile, aviation, plant and machinery, power, telecommunications, and printing, among others.
Meanwhile, the Manufacturers Association of Nigeria (MAN) on Thursday, said the Central Bank of Nigeria’s (CBN)’s flexible exchange rate policy has led to N500 billion loss for manufacturers.
Mr. Babatunde Odunayo, Chairman, MAN, Apapa branch, who made the assertion during its 45th Annual General Meeting in Lagos, said Letters of Credit (LC) and Form Ms approved for manufacturers at N197/$ before the introduction of the new flexible exchange rate on June 20, are now expected to be redeemed at N320.
An LC is a letter from a bank guaranteeing that a buyer’s payment to a seller would be received on time and for the correct amount.
“Unfortunately, this unfolding situation poses a great burden on manufacturers since the pricing of the related manufactured goods was made at N197 or N198 to the US dollar when it was approved.
“Manufacturers currently face up to N500 billion in exchange difference between the approved Form M and LC established rates and the flexible market rate of N320 to a dollar.
“This is a huge loss that manufacturers are expected to bear, whereas the related goods had been mostly sold before the commencement of the new exchange rate system,’’ Odunayo said.
He said the exchange rate loss of N500 billion reflected in their accounts and had led to factory closure, unemployment and loss of investments in the sector.
According to him, the exchange rate losses will require additional working capital to shore up cash difference between N320 and N197.
“Many of our members are in the middle of factory projects execution but the viability of such projects is now questionable due to recent forex developments,’’ he said.
Odunayo stressed that if loans were not reversed to pre-flexible exchange rate at which the transactions were contracted, losses to manufacturers would be colossal.
He urged the government to remove pre-approved Form Ms from the flexible foreign exchange market and deal with it through a structured sovereign loan.