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.
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.
“When I was elected as President of MAN, during my acceptance speech, I said there was a need for Paradigm Shift in the way we do business when we categorize manufacturing in this country. A situation where assembling of parts is called manufacturing is no manufacturing. To me, it shouldn’t be exactly manufacturing. What we should consider as manufacturing in this country is resource based industrialization- where we process materials we have in abundance either for the raw materials or for the finished products. That is what i called on resourced based industrialization. MAN is currently collaborating with RMRDC to see how we can fill-in the gaps. By giving us the outcome of their research efforts we can find ways of generating raw materials in Nigeria or having some members of MAN going into the production of certain raw materials that the country needs giving the available resources. That effort is ongoing now and we are also collaborating with other research institutes as well as other tertiary institutions and we have signed memorandum of Understanding with some research institutes in this regard. That is the best way to go. Importation is not the sustainable way to go. The sustainable way to go is resource based industrialization.”


www.vanguardngr.com/2016/04/cbn-averts-closure-200-manufacturing-firms-forex-access/

.

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 this.

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.

This is great news but some that have plucked out their eyes so they won't see nothing "good" till 2023 will still find holes to pick in this .

Anyway, make dem wail on, Ko Kan Aiye..

About time

Buharinomics policies are failing, hence HE has to soften his stance.

na waoooh

Pidggin:
Buharinomics policies are failing, hence HE has to soften his stance.

The day I saw a 25yr old keel over & die, I changed my stance that HBP nor fit kill small shindren & resolved to live as "free" from emotional baggage as it's human to be....

This will help you small! Thank me later!

“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.

finally this people are beginning to apply reason

CBN is confused, one day they make a policy, the next day they reverse it. Even a blind person can see why foreign investors are staying away from Nigeria.

A welcome gesture cos it's also affecting my wonderful company as well...

CBN should go and sit down with their on and off policy

The sure sign that whatever you are doing is not the right thing,

Is when you have to revert in order to get it right.








God help this economy with this kind of policies we have now.




Check my profile

Making policies and sustaining them are both on a different level.....God bless Nigeria.

.

Risky business though.

To put it bluntly, Nigerian industries are too reliant on imported raw materials. While this is not bad in itself,such a policy is sustainable ONLY if you are manufacturing in large volumes for the international market.....earning enough forex to import more raw materials (good examples...Japan and South Korea).

CBN cannot sustain this policy forever. This means one thing.....either Nigerian industries start using raw materials at home....or they raise prices.A third option is that they start exporting quality goods abroad....and earn enough forex to import as much raw material they need. That means that Nigerian companies have to change their mentality....from being so home focused...to being competitive in the African and international market.

APC govt needs to fix the power sector too....and needs to encourage small and medium scale industries that rely heavily on local raw materials via non-interest free loans for example. That means that all the loans they take better be judiciously used.

We keep on going back&forth.
Policies are meant to be sustainable.
Any policy that will not lead to sustainable development shouldn't be even considered.

Hmmm.... This CBN sure knows how to vacillate. Their policy Summersault abi na acrobatics sef is with such apt precision that one may easily mistake their foolery for wisdom.

Why start what you can't finish?
Didn't they envisage a situation like this?

Call this trial and error economics and you will not be far from the truth.

Wailers be like, 'what is the big deal '

modath:





This is great news but some that have plucked out their eyes so they won't see nothing "good" till 2023 will still find holes to pick in this .

Anyway, make dem wail on, Ko Kan Aiye..

They should have continued to make d forex available to only Aisha Buhari so dat she can sell her black market wella...
So if d companies didnt threaten, this govt wont do the right thing ...

This is what I like to hear... Flexibility in policies.

agarawu23:
CBN should go and sit down with their on and off policy

CBN is in a serious dilemma.

Keep in mind that this is not the year 2012...when oil was $112 , but this is the year 2016...when oil is $35.

That means that there isn't enough forex to import raw materials needed to keep the industries going. At the same time, CBN needs to hoard forex to make sure that the naira does not depreciate too fast.

The CBN cannot just afford to let dollars flow. That would be disastrous.At the same time....industries do need dollars for raw materials....and suppliers prefer to be paid in dollars. And no raw materials= job losses.

Ultimately....industries in this country have to develop their indigenous sources of raw materials....or manufacture heavily for the world market...making forex in large amounts to keep up profits, and import heavily.

Honestly, Nigerian companies are lazy. So long as the oil boom was there...they really did not need to bother about local content much. I hope the current crisis makes them sit up....and start looking inward.

What shall it profit the government to keep making policy reversals every now and then? Buhari is confused

modath:





This is great news but some that have plucked out their eyes so they won't see nothing "good" till 2023 will still find holes to pick in this .

Anyway, make dem wail on, Ko Kan Aiye..

No oh! Shebi according to y'all, the "all-knowing" Buhari is on the right track, restricting forex for businesses? They shouldn't have eased up a bit na, they should have continued so that all the companies in Nigeria collapses. Mstewwwww!

Seems like Emefiele read thru my thread or don't you think so my lovely love?...

Policy this, policy that!!!











Why not come up with a reasonable policy that will make the Dieing Naira equal the Dollar?

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.
# trial by government

GeneralShepherd:
What shall it profit the government to keep making policy reversals every now and then? Buhari is confused

The government isn't confused. It has the problem of deciding whether to let the dollars flow....and the naira depreciates too fast to a point where $1=N1000000...making it difficult for industries to operate thanks to inflation and so on...... OR it keeps an handle on the dollar flow and the naira remains stable....while industries close for lack of raw materials.

(If you were President,you won't be sleeping well thinking about it.)

The only way out is more forex.....which can be achieved by Nigerian companies becoming more productive....based on APC fixing the lights....and by using agric....as a short term means of gaining more forex (although agric too suffers from the same issues as oil...good harvests everywhere=price drops)

Hmm

samx4real:
Policy this, policy that!!!


Why not come up with a reasonable policy that will make the Dieing Naira equal the Dollar?

Good...so what policy do you think would make $1=N1?

(Considering that Buhari said he would make the naira at par with the dollar....which isn't the same thing as N1-$1).

For me....increased manufacturing .....which can start after a period where we improve power and transport....while cutting spending elsewhere....is the way forward.

modath:





This is great news but some that have plucked out their eyes so they won't see nothing "good" till 2023 will still find holes to pick in this .

Anyway, make dem wail on, Ko Kan Aiye..

Well in a way ur right. But dis is not so good news to me. Becos it reveals dat Nigeria is really not producing anything in dis country. We do not only assemble cars, we also assemble other products in Nigeria. When u have to import raw materials for your products, then ur more into assembling of ur products than full scale production.

Thank God for slump in oil price oh. It just showed how reckless we are as a country. Damn!

now you want to be robin hood, seizing all the dollars and giving it to them when they want to collapse in their production, so that all will praise you, our economy is falling and you think news can vindicate you.

Good step from CBN but if they're not meeting 100% needs of MAN, what percentage needs are they going to meet? 10, 20, 40......... if hundred percentage needs are not met and the manufacturers cut down their production, definitely their will still be job loss