CBN’s forex policy and death of factories
It is important to acknowledge the point of the Director General of Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, who disclosed that the Central Bank of Nigeria’s (CBN) foreign exchange policy restricting importation of 41 items has forced more than 200 factories to close down in the last two years. He also added that “to deny us access to those raw materials was ill-advised,” explaining that 95 out of the more than 680 tariff lines in the 41 items were raw materials that are not locally available and called for a change in the policy.
Although Ajayi-Kadir’s call is not quite different from MAN’s inflexible position since the CBN’s policy pronouncement on the 41 items, it would appear he is not aware of developments regarding CBN’s foreign exchange policy. It is good therefore to recall that the CBN, not too long ago, even eliminated preferential treatment of manufacturers and many others in the allocation of foreign exchange.
As this newspaper emphasized repeatedly, the justifications for the policy on the 41 items were and are still correct. They will be difficult, if not impossible, to fault given the level of development and capacity of this country as well as its current economic situation. Even, strict implementation of the policy has enormous prospects for changing economic fundamentals of Nigeria. But unfortunately, calls for a reversal of the policy are still coming from those who should not only know better but are in a position to benefit most from it, if only they can visualize and take advantage of the glaring opportunities. The only possible explanation for MAN’s disdain for the policy may be the evident coming to an end of the era of easy money via over-invoicing and foreign exchange round-tripping.
Quite interestingly, MAN, in all of its decrying of the policy on the 41 items, has not named the essential raw materials in the items that are not available locally. It has also neither named the specific companies affected nor what they produce. Even in the current outcry over the closure of about 200 factories, the association did not give examples of the factories whose closures were occasioned by the lack of imported raw materials. Perhaps, worse still is the fact that MAN has never highlighted what it did or has done in order to prevent the so-called closure of the factories.
With its many years of existence and importance in the economic space of the country, MAN ought to have a functioning research and development division to assist its members and indeed, the country in, among many other things, looking inwards for industrial raw materials that would keep factories in the country in operation without the need for importation. It is, no doubt, due to this lack of a functional research and development division at MAN that many of the products made by its members are often seen and even disdained by consumers as of poor quality compared to those imported from other jurisdictions. It is also why there can hardly be innovations in the manufacturing sector that can serve this country better. Rather than focus on how to drive the manufacturing sector better to fulfill its mandate, the association would seem to be always seeking sympathy for its members to continue to be baby-fed.
The CBN’s policy regarding the 41 items may be loathed by MAN and those who wish that this country continues to be eternally dependent on importation of materials that can be produced domestically as well as those that profit from such importations that are keeping the economy on its knees. The reality is that the policy provides enormous opportunities for manufacturers who want to justify their earnings by diligent work, innovation and adaptation to the needs of the times. The market place is dynamic and it is only companies that can effectively adapt to the constant changes that will survive.
If, given the circumstances of the times, MAN is unable to appreciate and give support to the policy on the 41 items, it will not be out of place to suggest that the organisation’s leadership does not have the well-being of its members as a focal objective and thus, lacks what it takes to lead such an important national association. By now, the association should not only have unveiled to its members the opportunities provided by the policy but supported them in getting the best out of it. Instead, it is playing what may be best described as negative advocacy since the emergence of the policy on the 41 items. As it were, economic advocacy is a serious business that cannot be played without credible and concrete facts as well as genuine intentions bed-rocked on fairness to all. MAN needs to re-examine itself and ensures it plays its roles devoid of being against any well-focused and well-intended policies as well as strategies meant to salvage this nation from economic slavery and stagnation or even retardation/recession.
Finally, it is imperative to point out that lamentations never solve problems. Manufacturers, indeed, all citizens must roll up their sleeves and commit to hard-work, diligence, prudence, patriotism and all other virtues that will ensure that this country produces all that it needs to consume, if it cannot export manufactured goods.