Urges CBN to settle unmet forex forward obligations
The Manufacturers Association of Nigeria (MAN) has expressed deep concerns regarding the unwholesome treatment of its members by some commercial banks in Nigeria regarding unmet foreign exchange (FX) forward obligations.
Director-General of MAN, Segun Ajayi-Kadir, who raised the concerns, yesterday, noted that as a vital sector of the economy, manufacturers rely heavily on access to FX for the importation of essential raw materials, machinery and equipment that are not locally available.
He, however, said that recent developments had shown a troubling trend in the way banks are handling the matter, to the detriment of manufacturing industries that have the needless misfortune of being at the receiving end of a problem they didn’t create and shouldn’t suffer for.
“Recently, our members have reported significant unwarranted complexities and undue highhandedness by the banks. Many have faced stringent requirements that are not aligned with the Central Bank of Nigeria’s (CBN) guidelines, resulting in unnecessary bottlenecks and illegal freezing of their corporate and personal bank accounts, with a negative impact on production, which could threaten the sustainability of manufacturing operations,” he said.
He noted that a worrisome case is the ongoing forex forward-related dispute involving KAM Industries Nigeria Limited, a leading manufacturer in the steel sector and a commercial bank, saying: “This rather unfortunate treatment of private business is only the reported one, and several others are undergoing similar harrowing experiences. This should stop in the interest of economic development of Nigeria, job security and business sustainability.”
“It is, therefore, pertinent for us, as the umbrella body for manufacturers, to clarify the position of our members with respect to the subject matter involving commercial banks and the Central Bank of Nigeria. Commercial banks receive payments in Naira either through direct remittance from their customers or credit facilities to secure FX for raw-material importation. Upon receipt of these funds or grant of credit facility, the banks then remit the Naira to the Central Bank on behalf of their customers. And from that point, the funds are deemed to be held by the apex bank, thereby completing the customers’ obligations.” He, therefore, said that MAN members are not liable for delays or complications arising after the remittance of funds to the CBN by commercial banks.
“Our members have played their part and the commercial banks should play their own. Our members should not be harassed by the banks. The banks should show understanding and be supportive as we all seek a solution to this rather unfortunate and unexpected impasse,” he noted.
He, therefore, urged dialogue between the commercial banks and affected members in order to end the forex forward imbroglio that has brought untold hardship on manufacturers and could potentially trigger a slide towards de-industrialisation of the country.
