Manufacturers decry sourcing 95 per cent of FX needs from black market

Director General, Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir (left); Chairman, Economic Policy Committee, MAN, R.I Odiah,; Vice President, Multinational, MAN, Christos Giannopoulos; Chief Executive Officer, the Nigerian Stock Exchange (NSE), Oscar N. Onyema; President, MAN, Dr. Frank S. Udemba Jacobs; Vice President (Lagos Zone) & Honourary National Treasurer, MAN, I.A Agoye; and Chairman, Finance & Establishment Committee, MAN, Francis Meshioye, at the closing ceremony at the Exchange.

The Manufacturers Association of Nigeria (MAN) has again decried the lingering foreign exchange crisis in the manufacturing sector noting that the sector is the worst hit, with impact on productivity and inflation.

According to MAN, the sector still depends largely on the black market for over 95 per cent of its forex needs, noting that only five per cent of its forex demand is sourced from the official market.

The president, Manufacturers Association of Nigeria (MAN), Otunba Francis Meshioye, at the 2023 edition of the MAN reporter of the year award and presidential media luncheon, stated the need for economic managers to urgently address infrastructure challenges hindering foreign direct investments (FDIs) into the sector.

In his words: “We have spoken with the current government and we expect that any government that comes in on May 29, 2023, will look into the manufacturing sector. For the forex challenge, we need to also look at how we manage our forex. These are different agendas we should focus on.
“Certain things are critical for us to predict our production costs and at the same time set our prices. Uncertainties in production costs and prices hinder the possibility of any investor bringing in money to invest into the sector while it also threatens the existing manufacturers to engage with the businesses effectively. Abstract infrastructure is very essential to be addressed to forge ahead.”

He noted that MAN is currently engaging the presidential campaign committees to enable them to understand the expectations of manufacturers in today’s Nigeria and the global world as a whole.

On the African Continental Free Trade Agreement (AfCFTA), the MAN boss also stated the need to understand the rules of origin in its bid to protect local production while also adding value to the nation’s products.
“We have worked on the rules of origin and we have done a couple of works on this which we believe is very fundamental to determine how we protect and add value to our local products. We want to be sure that we would be able to minimise and eliminate dumping. If we do not determine the rules of origin and have a proper understanding of it, we will have issues going forward. We must understand it and learn to apply it regularly,” he stated.

The Director General, MAN, Dr. Segun Ajayi-Kadir, said the sector is the only group of people that can be monitored effectively in terms of forex allocation.
“When we export and repatriate our profits, it goes through the Central Bank of Nigeria (CBN); so they know every kobo coming into our accounts. For us, we need a government that must deliberately address the issue of prioritising the allocation of forex to manufacturers. There is no way we would get out of the forex crisis if we do not produce locally,” he advised.

On AfCFTA, the Director-General underlined the fact about the opportunities and the weakness the trade pact offers, saying that to address the challenges of the agreement, it is vital to understand the rules of origin to avoid infiltrations from third countries.

“The rules of origin are very important, otherwise, we will continue to have infiltrations from third countries and what they will simply do is to approach any weak economy and through that do transshipment and other trade malpractices,” he warned.