NIGERIAN BUSINESSES BATTLE WITH ACCESS TO FOREX

The organised private sector weekend said that members are finding it difficult to pay foreign creditors for goods imported before the CBN restriction on 41 items access to foreign exchange market in Nigeria. They also said that many hotels in the country are saddled with large amounts of cash, foreign currency which they could not lodge into their domiciliary accounts or do business with. According to a survey report of members of Lagos Chamber of Commerce and Industry and other operators in the private sector, there is growing inability of Nigeria businesses to pay foreign creditors on account of items imported prior to the CBN policy. It also said that some manufacturers are unable to manufacture due to lack of foreign exchange to import raw materials. There is now delay in the processing of Form ‘M’ to import and meet demands. This has led to loss of market share and slower consumer demand and lower profits. But an official of the CBN who would for now want to maintain silence on this issue accused leaders of the organised private sector of speculative demand for foreign exchange and the unpatriotic act of round-tripping. He said that some of these private sector leaders have been doing round-tripping of foreign exchange, thus putting undue pressure on the naira. He challenged the members to come out with the list of items that are input to their productions that are not available locally for the authorities to see. But the operators said that PALM OIL for instance, is needed for production of some consumer goods and since local supply cannot meet industrial usage, the inability to import it has caused some difficulties for manufacturers in such sectors. Prices of such products have to increase at least marginally. They claimed that there is a supply gap of about 600,000 metric tonnes of palm oil annually in Nigeria. According to them, “Form M opened for items on the list prior to the CBN policy are not processed for payment leading to credit defaults with foreign suppliers. They equally said that vegetables and processed vegetable products used by Quick Service Restaurants are included in the list and this has affected negatively the availability of forex to import these materials. Sourcing locally will mean lower standards than international levels. Operators in their response to the survey said “Sourcing of foreign exchange at exorbitant rates from alternative sources is eroding already thin margins and that job losses are inevitable as the bottom line is being adversely affected. According to the survey report, there is now “Default in repayment agreements with foreign suppliers and banks. The Bills for Collection opened in respect of the 41 items prior to the CBN policy have suffered non-performance.’ It said that “Tyre is a composite product of more than 200 raw materials. It is therefore technically wrong to classify tyre as rubber instead of being termed an automotive part. Tyre business operators cannot source for forex to remain in operation. As a result, the prices of tyre have increased by 25 per cent since July 2015. This, they said, has led to increased spate of smuggling into the country with implications for loss of revenue from import duty and risk of increased road accident from fake vehicle tyres”. Private sector operators in their complaint said that “some raw and packaging materials that are required in manufacturing process are on the exclusive list. These materials are not available locally and have to be imported. There are issues with the ambiguous classification of the items on the list. For instance, glassware and glass bottles, especially different small sizes needed for packaging of medicines; the glass bottles have been classified as glassware and as such, cannot access foreign exchange to import them. Local bottlers do not produce the small sizes as local requirements are not large enough to attract them into producing small glass sizes”. In the Pharmaceutical sector, they said: “There is now “Scarcity of Pharmaceutical package materials such as glass and plastic bottles. Industry operators have almost run out of key packaging input with implications of shut down and job losses in near term”. “The quality of loan assets in the banking system and sustainability of many enterprises are now at risk. Many parents are currently faced with the predicament of how to remit funds for the upkeep of their children abroad, especially those in schools. Only fees paid directly to the schools can be remitted under the present regulation”.