Abstract：The Manufacturers Association of Nigeria (MAN) is pleading with the Central Bank of Nigeria (CBN) to examine the present foreign exchange (forex) policy in order to give manufacturers access to forex through a designated window for the importation of raw materials.
The Manufacturers Association of Nigeria (MAN) is pleading with the Central Bank of Nigeria (CBN) to examine the present foreign exchange (forex) policy in order to give manufacturers access to forex through a designated window for the importation of raw materials.
Mansur Ahmed, national president of MAN, said that the current forex regime, in which forex is allocated to both importers of finished goods and raw materials at the same rate in the same window, is a deterrent to the real sector. He made this statement at the MAN CEOs/Managing Directors' breakfast meeting in Lagos.
It had earlier this year stated that due to the progressive devaluation of the naira, currency shortage, and impact of border closure, the cost of raw materials for consumer products businesses quoted on the Nigerian Exchange Limited (NGX) increased substantially by 40% in 2021 to N451.56 billion.
As a result, for the seven consumer goods companies Vanguard reviewed at the time, the ratio of raw materials cost to the total cost of sales increased from 74.6 percent in 2020 to 78.3 percent in 2021, representing a 3.7 percentage point increase. It also revealed that the companies spent 55.9 percent of their revenue on acquiring raw materials.
In addition, Ahmed bemoaned the impact of the high cost of diesel on production, claiming that efforts to convince the federal government to permit the importation of diesel from the neighboring Niger Republic to lessen the impact of the rising prices on production have run into a brick wall. Ahmed was represented by John Aliyah, the Lagos Zonal Vice Chairman, MAN.
We need to continue our industry, and for us to accomplish so, the government needs to provide us with the appropriate atmosphere, he added. The absence of any infrastructure is the largest problem we now face. Manufacturing is impossible without infrastructure.
Various attendees at today's breakfast gathering reported that the cost of fuel has increased to N1,100 per liter in some regions of the nation. How is that possible for a manufacturer？
He said, The foreign exchange is another enormous problem. We don't have a very large raw material base in our nation, thus the majority of the raw materials we utilize are imported.
Because the dollar has risen too much, we are unable to obtain the foreign exchange to import the raw supplies. The current exchange rate is about N620 to $1. At that exchange rate, how would you be able to create while still being able to sell？ No market will exist.
We are requesting that the government and its departments reevaluate the issue. Although the government now classifies individuals who import completed goods and those who import raw materials as belonging to the same group, we have argued that foreign exchange for raw materials should be granted at the official rate. Everyone tries to obtain something, but you are unable to since a trader with little investment has more liquidity to play with than a producer that has heavily invested in machinery and other equipment.
The association is aware that certain industrial enterprises are having a tough time surviving in the current economic climate, said Elder Robert Ugbaja, Chairman of the MAN Ikeja chapter. Some businesses have stopped operating, particularly as a result of the difficulty in importing raw materials and the expensive fuel at the pump.
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