OPS seeks incentives from CBN over forex exposure

Godwin Emefiele, CBN Governor

Godwin Emefiele, CBN Governor

With many manufacturers already feeling the heat of the recent Central Bank of Nigeria’s (CBN) monetary policy, members of the real sector have urged the apex bank and federal government to consider palliatives and incentives as buffers against the negative effects of the policy.

Indeed, members of the organised private sector urged the CBN to allow appropriate time frames for items which require some time interval before local substitutes can be created for imported raw materials, adding that manufacturers have suffered significant consequences from the recent currency devaluation which they are yet to recover.

Similarly, the stakeholders expressed need for CBN to harmonise its policies with other agencies of government, including Customs, Federal Inland Revenue Service (FIRS), Standards Organisation of Nigeria (SON), Immigration among others, stating that the recent introduction of the ECOWAS Common External Tariff (CET) for instance by the Customs appears to be at cross-purposes with the apex bank’s policy.

In a communiqué it issued after a public forum with officials of the CBN in Lagos, the Lagos Chamber of Commerce and Industry (LCCI) advised the CBN to urgently simulate the impact of this policy on employment, inflation and output in 2015 and thereafter and to review the policy accordingly, noting that there are no doubts that the impact in all three highlighted areas will be significantly negative.

According to the chamber, many of the listed items are raw materials, which manufacturing companies usually need for production.

The communiqué, signed by the Director-General, LCCI, Mr. Muda Yusuf, and made available to The Guardian, noted that the new forex rule could also lead to inflation and significant reduction in the nation’s Gross Domestic Product.

It read in part, “Given the dominant role of the CBN in FX supplies in Nigeria and the fact that all three ‘official’ markets are excluded, the policy means manufacturers who require any of the 41 restricted items as input and raw materials for their production may have to simply shut their operations once the existing stock is exhausted.

“The LCCI understands the CBN’s constraints and circumstances as it drew up this policy. It, however, appears as if the formulation of the policy has suffered from the CBN’s limited understanding of the manufacturing process of many of the sectors affected by this policy.

“Many of the restricted items are irreplaceable raw materials in the manufacturing process of many industries and this policy will cause significant damage to the Nigerian manufacturing sector and economy. We affirm that while there are several items on the list, which any patriotic Nigerian will not object to, there are many others that will harm the manufacturing sector.”

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