By Bassey Udo
Amid lamentations by the Manufacturers Association of Nigeria (MAN) about the impact of the foreign exchange supply squeeze on the manufacturing sector, the Central Bank of Nigeria (CBN) reassured Nigerians of determination to manage both the demand and supply side challenges.
Recently, the Director-General of MAN, Segun Ajayi-Kadir, disclosed that the crisis in the country’s FOREX market, which has seen Naira value depreciating to unprecedented levels against other international currencies, resulted in local manufacturers’ costs of operation and production rising from 30 percent to 100 percent.
Ajayi-Kadir said the acute shortage of FOREX and the high depreciation of the Naira in recent times have seriously impacted most businesses across all sectors of the economy, with manufacturing the most affected sector.
Although the CBN official exchange rate in the I import & export window stood at N416.37 to the dollar on Friday, the rate at the parallel market was about N705 to the dollar.
There were speculations on Monday that hundreds of companies have been run out of business as a result of lack of access to FOREX to continue operations.
Regardless, the apex bank said despite the increasing demand for FOREX for goods and services by Nigerians, urged caution and resist the temptation to resort to speculative activities by some players in the market.
The CBN spokesperson, Osita Nwanisobi said the apex banking sector regulator remained committed to resolving the FOREX crisis the country is facing.
Nwanisobi who admitted there was huge demand pressure for FOREX to meet the needs of manufacturers as well as those for the payment of tuition, medical fees and other invisible, said the Bank was leaving stone unturned to manage both the demand and supply side challenges in the market.
He said the Bank was concerned about the international value of the Naira, adding that the monetary authority was strategizing to help Nigeria earn more stable and sustainable inflows of FOREX in the face of dwindling inflows from the oil sector.
Specifically, he identified recent initiatives undertaken by the Bank, such as the RT200 FX Programme and the Naira4Dollar rebate scheme, to help boost foreign exchange inflows to the country.
The Bank’s records, he said, showed that FOREX inflow through the RT200 FX Programme in the first and second quarters of 2022 increased significantly to about $600 million as at June 2022.
Similarly, he disclosed that the Naira4Dollar incentive also increased the volume of Diaspora remittances during the first half of the year.
The CBN spokesperson said other interventions such as 100-for-100 Policy on Production and Productivity, Anchor Borrowers’ Programme (ABP) and the Non-Oil Export Stimulation Facility (NESF), among others, were also geared towards diversifying the economy, enhancing inflow of foreign exchange, stimulating production and reducing foreign exchange demand pressure.
Nwanisobi said the Bank would continue to make deliberate efforts in the foreign exchange sector to avert further decline in the value of the naira, which he observed, was fuelled by speculative activities in the market.
To discourage more FOREX demand, the CBN Governor, Godwin Emefiele, recently urged Nigerians to adjust their consumption patterns, by looking inwards and finding innovative solutions to the country’s imports.
One of such innovative ways was finding ways to produce local substitutes to imported goods and services.
The CBN governor said monetary policy alone was not enough to bear all the burden of the expected adjustments to manage the challenges around Nigeria’s FOREX, and as it required the collective responsibility of all Nigerians to shore up the value of the Naira.