‘50 firms shut down over restriction on raw materials’
•More to go as govt mulls fiscal response for forex imbalances
With government sustaining its restriction on some items used as raw materials in the manufacturing sector, no fewer than 50 industrial firms have shut down operations with many more struggling to stay in business as capacity utilisation level drops further.
Specifically, the President of Manufacturers Association of Nigeria (MAN), Dr Frank Jacobs, while appealing to the Federal Government to address foreign exchange restriction on some commodities used as raw materials in the real sector stated that many firms are struggling to sustain their businesses due to the Central Bank of Nigeria’s monetary policy.
Meanwhile, the Federal Government, through the Vice President, Prof. Yemi Osinbajo, stated that efforts were underway to address some monetary policy challenges through fiscal policy frameworks.
MAN had earlier in the year, projected a continued rise in consumer prices within the first half of 2016 if the issue was not addressed, noting that many industrialists may run out of stock of some raw materials used for production by the end of first quarter of 2016, as access to foreign exchange remains limited.
Specifically, Jacobs, during a Presidential Policy Dialogue with Vice President Yemi Osinbajo, noted that about 680 HS codes were identified following the breakdown and classification of the 41 restricted items by the Central Bank of Nigeria (CBN) from the official forex window into HS codes.
Of the 680 HS codes, Jacobs explained that 95 HS codes are raw materials used in the course of production in factories and they are presently restricted from access to forex market.
While the CBN might have made pronouncement unveiling its resolve to give priority to some of the HS classified products, manufacturers believe the order of priority needs to be addressed urgently as there are outstanding requests to meet local production needs.
According to him, at least 50 firms have shut down operations with many more struggling to maintain their production schedule.
“We have appealed to the CBN to remove those items from the list and if that had been done, we would have been shouting for joy because the rest of the 585 items will be to the benefit of the country because if those items are not imported; it will be better for the economy,” he told The Guardian in an earlier interview.
Osinbajo said the immediate task before the present administration is reduce fiscal, forex imbalances, lower interest rates, and increase lending to the real sector of the economy, to achieve rapid economic growth.
Osinbajo said other tasks under immediate priority included boosting dollar liquidity, curbing inflation and increasing Foreign Direct Investments (FDIs) by sustaining enabling policies. This is aimed at encouraging Public Private Partnerships (PPPs) and organising collaborative engagements with the private sector, to deepen the nation’s diversification efforts and create jobs directly and indirectly, to alleviate poverty.
Indeed, MAN had called on Nigerians to brace up for a very difficult time going forward in the year, stating that the nation is transiting from what it calls a disorganised system to a more organised system and would require sacrifices on the part of every Nigerian to get the country back on track.