MANUFACTURERS for the umpteenth time are urging the Central Bank of Nigeria’s (CBN) fulfillment of N2.4 billion foreign exchange (FX) forward obligations to its members.
A foreign exchange forward is an agreement between two parties – in this case Central Bank – to buy or sell currency at a specified price on a predefined expiry date.
The manufacturers said the inability of the apex bank to clear this outstanding $2.4 billion obligation is negatively impacting the economy’s productive sector.
The director-general of MAN, Segun Kadir-Ajayi, who spoke exclusively to The ICIR said manufacturers are faced with high-integrity payments as a result of the inability of the CBN to fulfill its part of the commitments while putting the estimated impact loss to businesses at N1.8 trillion.
According to him, this has exacerbated the economic woes of manufacturers, many of whom are facing bankruptcy due to the added financial strain.
“Manufacturers are enduring forwards of high-interest payments from both the local and international banks, for this delayed payment despite fulfilling their side of the bargain, “he said.
He added that the development is negatively affecting the operations of manufacturers, with its overbearing rise in production costs for consumers.
He further urged the apex bank to fulfill their side of the obligations as the development is eroding the trust private businesses have in the apex bank.
Ajayi-Kadir also stressed that the clearance will help insulate the manufacturing sector from volatile exchange rate negative impacts.
Meanwhile, the ICIR reached out to the CBN’s official spokesperson, Sidi Hakama, but did not get any response.
Commenting on the negative impact of the unstable exchange rate on businesses, the MAN helmsman said, “It’s not helping to reduce the cost of goods as it’s affecting the cost of goods.
He, however, said that the Nigerian Customs Service (NCS) is seeking to engage the manufacturers on a stable exchange rate for manufacturers as part of their trade facilitation responsibility.
In a related development, a research economist, Gospel Obele said the federal government’s inability to incentivise businesses and provide loan facilities at a single-digit interest rate is a major cause of the rising price of goods.
According to the economist, businesses are transferring prices to the consumers which are fuelling high consumer goods costs.
“Nigerians pay more to consume at higher costs, amid rising manufacturing and production costs. This is not a good development as it weakens the purchasing power of goods.”
He urges caution, stressing that gross domestic product GDP growth appreciation to 3.19 per cent in the second quarter, which accelerated from 2.98 per cent in the previous three-month period is not impacting enough on the productive sector of the economy.
He suggested that the GDP growth must be refocused by the government to deal with access to the market, finance, and enabling business environment.
“GDP can be used to stir productivity, unlock financing and services sector, where the average man can afford the basic things of life and elevate the quality of their life,” he further said.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.