No respite for importers, manufacturers in 2016 as Buhari sustains forex restriction
The hope of Nigerian importers, who looked forward to an ease business environment in 2016, were recently dashed as President Muhammadu Buhari pronounced at his maiden ‘Presidential Media Chat’ that his administration has no plans to lift the restriction placed on foreign currency transaction on imports by the Central Bank of Nigeria (CBN).
Recall that in 2015, the apex regulatory bank CBN, restricted importers of 41 select items including rice, toothpick and others from accessing foreign exchange from the official market. The directive, which also works against the manufacturing sector as many manufactures, complained that some of their raw materials and critical input are contained in the 41 items banned from accessing forex from the official window.
Importers and manufacturers, who strongly criticised the CBN policy describing it as over regulation, which affects business growth especially in an import dependent economy, may be out longer in the cold as the federal government foreclosed the possibility of an early reversal of the policy.
According to Mr. President, “Nigeria has no fund to enable to reverse the policy and the nation’s priority is to provide fund for infrastructure and other important projects, which we have already outlined and not for those who want hard currency to import textile and toothpick.”
The President made it clear that his administration would not condone unbridled importation of goods into the country.
The implication of this, analysts say, is that it will be extremely difficult for genuine importers and tough for port business to record high volume. This, they say, may result to shutting down of some ports and bonded terminals over inability to attract businesses.
Tony Anakebe, a maritime analyst, said that the volume of Twenty Equivalent Units (TEUs) of containers will continue to reduce and it may result to foreigners, who invested in Nigeria’s port terminals, to be under serious pressure of cost saving while bonded terminals, will have to close shop due to lack of business.
Reacting to this, the Lagos Chamber of Commerce and Industry (LCCI) says that non-adjustment of the foreign exchange rate by CBN would have negative impact on the economy especially in the first quarter of the year.
Muda Yusuf, director general of LCCI, who said that the measure would lead to the closure of factories, loss of jobs and high rate of unemployment, also called on government to put palliative measures that would pave way for quick economic recovery in place
According to him, lifting the forex restriction on key commodities that serve as critical inputs for the manufacturing sector, would contribute immensely to the growth and development of non-oil sector.
“The Nigerian business community are very concerned about the current state of the economy and the consequences of the CBN approach to the management of foreign exchange market over the last few months,” he noted.
Continuing, he stated: “We want CBN to lift the ban on foreign exchange and government needs to do something urgently to convince Nigerians, private sector operators and manufacturers to do business this year. We believe that removal of the ban on forex and adjustment of the exchange rate will make substantial impact on economic recovery.”