By Bimbola Oyesola

AS much as the members of the Organised Private Sectors (OPS) would like to continue to express optimism in the nation’s economy, recent trend in the country has given the manufacturers a serious cause for concern.

Since the Central Bank of Nigeria (CBN) unveiled its controls in June, on the new Foreign Exchange policy, manufacturers have had to deal with foreign suppliers who are increasingly getting worried they won’t get paid after supplying raw materials to Nigerians. They are also struggling to convince banks to approve dollar payments.

Investigations revealed that it now takes minimum of 10 days to get dollars as against the pre-control days when the cycle was done within 24-48 hours. Even then, most manufacturers say they get below what they actually requested.

Some firms have defaulted on contracts and lost credit lines. “Many companies have defaulted in fulfilling foreign obligations … even blue chip companies … for the first time,” said Muda Yusuf, Director General of the Lagos Chamber of Commerce and Industry (LCCI). He noted that companies also suffer from the CBN’s attempt to stop the
dollarisation of the economy, adding that a ban on cash deposits of foreign currency has forced firms to use informal “transfer markets”, whereby people abroad wire
dollars on a company’s behalf. With the exchange rate well below the official rate to the dollar, it has also been discovered that some manufacturers now carry bags of cash to deposit in neighbouring countries.

Another survey report of members by LCCI revealed there is now delay in the processing of Form ‘M’ to import and meet demands, leading to loss of market share and slower consumer demand and lower profits. The report further stated that export business is hugely affected as they are unable to sponsor and pay marketing activities outside the country and that they are also experiencing payment delay.

A respondent to the survey report said, “export proceeds have become idle while in need of forex to import through other banks. Companies in the Fast Moving Consumer Goods sector are unable to settle outstanding obligations to foreign suppliers, which has slowed down their ability to get fresh supplies for production.”

The survey also added that there are now “delays in sourcing forex to import spare parts to meet breakdown of production machinery, adding that spare parts that were picked off the shelves before will now need to undergo series of processing before forex is made available to import them.

The operators claimed that Form M opened for items on the list prior to the CBN policy are not processed for payment leading to credit defaults with foreign suppliers.

The President of Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs, said doing business in Nigeria for the operators in the private sector is daily getting unbearable as there is growing inability of Nigerian businesses to pay foreign creditors on account of the CBN forex policy.

The association’s boss also said that some manufacturers are unable to manufacture due to lack of foreign exchange to import raw materials.

According to Jacobs, the crux of this challenge emanated from the decline in crude oil prices recorded in the last quarter of 2014 and the first quarter of 2015. “The trickle-down effects of the declining price of crude oil created a highly challenging environment for the manufacturing sector in the country, which has been historically challenged by dearth of infrastructure,” he said.

But the last straw that broke the camel’s back, he said, was the problem of inadequate foreign exchange and the new foreign exchange guidelines of the CBN, which he said to a large extent, negatively affected productivity by increasing the cost of manufacturing.

Jacobs explained that since the policy came out, the manufacturers now experience difficulties in importing raw material inputs into the country. “All these, without doubt, could result in factory closures and consequent loss of jobs, if not addressed quickly,” he said.

He further warned that the above challenges conspicuously reflected in the performance of key macroeconomic indicators and as corroborated by statistics churned out by the Nigeria Bureau of Statistics (NBS), the CBN and the Organisation of Petroleum Exporting Countries (OPEC).

MAN said the review of performances of key indicators in the first quarter compared with the second quarter, on the negative side, reflected that the real GDP growth still
hovered around 3.96 per cent, which is below 5.94 percent recorded in the last quarter of 2014, the External Reserves also declined from $29.81 billion to $29.01billion; Average Interest Rate significantly increased from 16.84 per cent to 26.48 percent while the Inflation Rate increased from 8.2 per cent to 8.6 per cent.

Speaking on the new policy, which listed 41 items that are not valid for foreign exchange by the CBN in its effort to address the sliding value of the naira, the association said after studying the content of the circular, it observed that essential raw materials input were included in the list and as such pointed out to CBN that only imported finished items should be on the list for it to be truly beneficial to the manufacturing sector and the economy generally.

Jacobs said MAN was very concerned with the exclusion of such items as palm kernel/palm oil/vegetable oil; cold rolled and galvanised steel sheets, among others,from the inter-bank forex market, which he said, was as a result of difficulties in determining what constitutes raw material and finished product.

He stated further that, “the reality is that one company’s finished product could be input material for another. In fact, most of the items included in the list were raw materials being used by some manufacturers in their production. This action implies that the companies involved may not be able to import their needed raw materials for production and the implication could mean massive retrenchment and on the extreme, factory closure.

The MAN President harped that the two sectors mostly affected are Food, Beverages and Tobacco and Steel sectors, which incidentally are the largest employers of
labour among MAN sectoral groups, warning that a shake-up in these two sectors would diminish the little headway already made in employment creation and poverty reduction in the country.

He said, “the position of the association was formally communicated to the CBN vide a letter dated June 29, 2015, which detailed ambiguities contained in the circular. MAN enumerated some essential raw materials that are not available locally that were lumped together with finished goods.

“In addition, MAN analysed the 41 items into 680 items, based on their respective sectoral and sub-sectoral groups and submitted a comprehensive list of 105 raw
material items (which are products of rigorous consultations with all sub-sectors of the manufacturing sector) with their respective HS Codes, which were affected by the guidelines to the CBN.

The association further listed 93 finished products that
are produced locally with sufficient capacity which should be added to the 41 items.”

http://sunnewsonline.com/new/youre-killing-local-manufacturers-man-alerts-cbn/

Yucks,Hailing hailers wnt like this.
More trouble looms sha,but trust Apc they always have somtin to blame it on.(falling oil prices).

This is bad.

Now everybody is struggling to keep his job by accepting whatever Buhari has to say or command without muttering a word of advise even though his appointment and profession would permit.

The CBN gov has no choice than to dance to the tune. How long shall it be and what ends is in sight?

Things will get worse before they get better. Nigeria cannot afford to continue with business as usual. It is what brought us to where we are.

Had the last govt succeeded in staying put, Nigeria would have become a failed state as the FG was already borrowing to pay its employees.

He noted that companies also suffer from the CBN’s attempt to stop the dollarisation of the economy..

So, CBN is wrong to attempt to stop dollarization of the economy by simply making it impossible to deposit dollars in local accounts? See reasoning!

In as much as I understand that some genuine businesses will be affected by the CBN policy in the short run, the long run picture which is the overall interest of Nigeria should be of higher concern/value. No sane country allows dollarization of her economy by a privileged few who are mostly thieving politicians.

Sad

b

Buhari must hear this.

Ok

PMB take note

Buhari killing us softly with his body odour.

this country is just going backward...

no be today, e don tay

[size=15pt]All hail the DuaraaDullard - Government of body odour[/size]

I expect the APC e-rodents to blame GEJ.

[img]http://anti-perspirant.info/files/2011/09/body_odor_remedy.jpg[/img]

[img]http://economictimes.indiatimes.com/photo/48485243.cms[/img]

Am I falling or am I flying? am I living or am I dying? Oh great spirit! free me from the bonds of Gravity and Criticism. Deliver me from the hands of my greatest enemy Mediocrity.Perfection I crave for although, they said I cannot attain it but I Still strive for it anyway.Let me meander through the curse upon Nigerian Students which has been pronounced upon Nigerian students by the Employers and Neocolonialists chanting the adverb"Unemployable".Let me rise up early in the morning both vertically, Mentally, Financially and Spiritually to meet a world free from fear, Terrorism and social Unstability. A world where Bokoharam can only be found in Novels written by The Great Chinua Achebe and the Missing Chibok girls in Books by chimamanda adichie. Amen

With the appointment of Ministers, I believe the economic direction of the government is going to be spelt out soon which will boast investors' confidence. Nigeria's morning is near when joy cometh so just chill.

Buhari the devil's incarnate sent to destroy Nigeria's economy with mouth action and body odour.

They should look for better ways for paying for goods and services, also companies should start doing R&D in Nigeria to source for raw materials and let the money stay in Nigeria pls.

As usual the APC will blame it on Gej. Useless people

As it-

- was in 1984,
- is now and
- ever will be

with the DauraDafty.




www.nairaland.com/attachments/2095210_worst_jpeg588f192a23aa02a7b350a8bbe5d18306

Anybody that complains of the CBN policy on forex is definitely not a local manufacturer, but rather an agent and distributor of foreign produced goods. The 41 items banned from accessing official FX are goods that Nigeria have comparative advantages in producing and require little or non imported raw material

[size=13pt]STRANGE TURN OF EVIDENTS FROM APC.

AND THE LIST GROWS.

[b]WELL APC & DULLARD KNOW WHAT THEY ARE DOING.

THE PRIVATE SECTOR IS SUFFERING UNDER DULLARD & APC

THE APC's SENATE PRESIDENT IS FIGHTING FOR HIS POLITICAL CAREER!

APC GUBERNATORIAL KOGI CANDIDATE STOLE MONEY AND ADMITTED IT, YET FREE




BOKO HARAM IS KILLING WITH IMPUNITY.

FULANI HERDS MEN ARE KIDNAPPING YORUBA ELDERS WITH EASE.



FULANI HERDS MEN ARE KILLING FARMERS ALL OVER THE PLACE.

B00HARI DON ENTER JP MORGAN EXITS NIJA

NAIRA DON DEY FALL.

BOKO HARAM SUSPECTS ARE BEING SET FREE AND REWARDED FOR MURDER

[img]http://i1.wp.com/ynaija.com/wp-content/uploads/2015/09/suspects3.jpg?zoom=1.5&resize=640%2C423[/img]

B00HARI IS THE ONLY LEADER TO THINK MICHELLE IS THE PRESIDENT OF WEST GERMANY.

B00HARI IS THE ONLY NIGERIAN LEADER THEY WONT LET ADDRESS THE NATION DIRECTLY,
SO HE DOES NOT ADDRESS TINUBU AS AWOLOWO SINCE HE THINKS MICHELLE IS THE PRESIDENT OF WEST GERMANY.

NIGERIA'S ECONOMY THAT WAS REGARDED WORLD-WIDE AS GROWING IS NOW IN JEOPARDY

DULLARD IGNORES FEDERAL CHARACTER AND APPOINTS ONLY THE NORTH TO KEY POSITIONS.
DULLARD IN A DEMOCRATIC SYSTEM IS PRACTICING NORTHOCRACY.
GOVT OF THE NORTH FOR THE NORTH BY THE NORTH


BOKO HARAM MEMBERS WERE ARRESTED IN THE SOUTH EAST & SOUTH WEST

BEGGARS THREATENED THE GOVERNMENT OF KADUNA STATE.

DULLARD IS THE 1ST PRESIDENT TO TAKE HIS CHILD ON A GOVERNMENT FUNDED OFFICIAL TRIP.
AND THE TRIP WAS PAID FOR BY THE TAX OF THE NIGERIAN MASSES.

₦AIRA HAS FALLEN SO MANY TIMES SINCE DULLARD & APC GOT IN.

DULLARD HAS CUT OFF THE SOUTH-WEST THAT GAVE HIM THE PRESIDENCY.

GIVES ONLY THE NORTH NICE APPOINTMENTS, WHILE IGNORING THE REST OF THE COUNTRY

MAKE'S SURE ONLY THE NORTH GETS SENATE PRESIDENT & SPEAKER OF REPS.

GRACIOUSLY GIVES THE EAST OF NIGERIA BOKO HARAM PRISONERS

WONDERFUL GIVES THE SOUTH-SOUTH NUCLEAR REACTORS THAT OTHERS KNOW IS A DEATH TRAP.

BOKO HARAM HAS INCREASED IT'S KILLING, EVEN BURNING THE HOUSE OF TOP MILITARY MAN.

BOKO HARAM IS NOW SENDING CHILDREN TO BOMB FOR THEM.

KADUNA STATE GOVERNOR IS CALLING THE VICE PRESIDENT A "MERE COMMISSIONER"

DULLARD DOES NOT WANT TO SUPPORT THE NIGER DELTA GUYS WHO REFUSED VIOLENCE TO GO TO SCHOOL!
WHO SAID DULLARD & APC ARE NOT WORKING[/b][/size] [size=36pt] ?[/size]

[img]http://i./Fn7q3cMgPZmqk.gif[/img]

PassingShot:
Things will get worse before they get better.

Had the last govt succeeded in staying put, Nigeria would have become a failed state.


So, CBN is wrong to attept to stop dollarization of the economy by simply making it impossible to deposit dollars in local accounts?

In as much as I understand that some genuine businesses will be affected by the CBN policy in the short run, the long run picture which is the overall interest of Nigeria should be of higher concern/value. No sane country allows dollarization of her economy by a privileged few who are mostly thieving politicians.

okay... When our manufacturing companies fold up... Then things will get better at the long run... I hear you

I don't want to sound "wicked" here,but...."Local" manufactureres that source their raw materials abroad are not "Local" enough in my opinion....Maybe they should look inward for their raw materials and improve the contry's economy. It's hard Yes. But it has to be done....OR the CBN should exclude their raw materials from the list. But this law as far am concerned, is for the greater good of the Greater Majority for the Greater Long term of time...

This is what we have been saying since. You cannot unilaterally take decisions that affect the economy in all ramifications without consulting the stakeholders extensively. This new government should worry every sensible Nigerian. Pls o u guys shud not take us back to 1983. Decisions cannot and should not be allowed to be taken by an old senile septuagenarian who knows little or nothing about current world economics and has refused to consult and heed advice of people who know what he doesn't. A better Nigeria I still pray for... Though we cannot continue to survive as a nation except a referendum is held on who still wants to be part if the entity called Nigeria or we go back to the original confederal system of government where the region's or states have much more autonomy and power than the centre. Enough said.

garsul:
Anybody that complains of the CBN policy on forex is definitely not a local manufacturer, but rather an agent and distributor of foreign produced goods. The 41 items banned from accessing official FX are goods that Nigeria have comparative advantages in producing and require little or non imported raw material

The banned items are