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Manufacturers allege sharp practices in forex allocation by banks

By Adamu Abuh (Abuja) and Femi Adekoya (Lagos)   |   19 October 2016   |   3:59 am
CBN building

CBN building

• CBN accuses producers of round-tripping
• Reps probe regulator over non-release of foreign exchange to agro firms

Operators in the manufacturing sector are alleging sharp practices and favouritism among deposit money banks in the allocation of foreign exchange (forex) under the intervention programme of the Central Bank of Nigeria (CBN).

Consequently, they want the apex bank to review the allocation of forex in the industry for greater efficiency.

While some private sector operators got invitations from their banks to put forward their forex demands, others, mainly small-scale operators, are yet to get feedbacks from their banks for requests sent in more than two months ago.

Aggrieved operators accused the banks of allocating forex only to their favourite customers, adding that only large and medium-sized manufacturers have access to dollars at the interbank rates, while small-scale industries are ignored.

But the CBN, which confirmed it was meeting with all stakeholders involved in the matter this week, accused the manufacturers of round-tripping.

In a response to The Guardian’s enquiry, a top official of the CBN assured that the apex bank “will look into the matter.”

He admitted that the bank had received numerous complaints from manufacturers on the subject.

He, however, blamed the manufacturers for not deploying the forex they got in the past into good use, accusing them of round-tripping.

“Yes, we have had a series of complaints from manufacturers over this (access to forex), which is why we are going to meet with all the parties involved this week. The truth is, now they are complaining they are not getting forex, but when they were getting it, what were they doing with it? They were round-tripping with it. How many jobs did they generate on account of the forex they received in the past?”

Admitting this does not excuse the banks’ sharp practices, he assured that the CBN would soon resolve the crisis.

But countering the CBN’s accusations, the President of the Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs, retorted: “How can you round-trip with what you cannot get? As it is today, manufacturers cannot get foreign exchange. No bank takes manufacturers seriously. They even laugh at us, telling us that the CBN cannot determine how they disburse the funds.

“I am supposed to meet the CBN governor this week to address the issue because he has accused us of not being fair to him. My members are complaining. The commercial banks say that the 60 per cent allocation cannot work. We hope to meet the governor to make this work. Commercial banks need to see themselves as development partners. If the apex bank issues a directive, they should be able to follow it. Since they are not complying and implementing the directive, I will find ways to see that they do so.”

The CBN had two months ago directed all commercial banks and other authorised dealers in the foreign exchange market to ensure that they channel at least 60 per cent of their total forex purchases from all sources (interbank inclusive) to manufacturers, strictly for the purpose of importation of raw materials, plant and machinery.

But operators said continued dependence on the parallel market for forex used as inputs for their production, alongside payment for natural gas in foreign exchange, had affected the prices of commodities in the market.

Meanwhile, the House of Representatives yesterday resolved to probe the CBN for allegedly refusing to release foreign exchange to agro-allied industries.

The decision followed the adoption of a motion sponsored by Mr. Abubakar Amudakannike Garba at the plenary presided over by Speaker Yakubu Dogara.

The lawmakers mandated its Committees on Agricultural Production and Services and Banking and Currency to investigate the inability of agricultural value chain industries and others to access foreign exchange from the CBN, with a view to averting shutting down their of operations in view of the adverse consequences.

  • infinity2020

    Nigerian manufacturers what are you manufacturing without electricity?

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