The recent directive by the Central Bank of Nigeria (CBN) to remove restrictions on access to foreign exchange (Forex) for imports of 43 items has raised concerns in the manufacturing sector. According to Mr. Lekan Adewoye, the Vice Chairman of the Basic Metal sector of the Manufacturers Association of Nigeria (MAN), this move threatens the already struggling manufacturing industry.
In an interview on TVC Business, Mr. Adewoye expressed the concerns of manufacturers regarding this policy change. He highlighted the importance of supporting local production and emphasized that items that can be produced within Nigeria should be encouraged. The fear is that the new directive could negatively impact manufacturers who have invested in backward integration, as anyone with access to Forex can now claim to be an importer, potentially forcing sincere manufacturers to shut down and leading to increased joblessness.
While acknowledging that there might be a few items of national importance among the 43, Mr. Adewoye questioned the blanket allowance for all of them. He emphasized the need for the government to take action, as the consequence of manufacturing companies shutting down would result in significant job losses.
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One of the key concerns raised is the lack of competitive advantage for Nigerian manufacturers compared to their global and West African counterparts. Mr. Adewoye pointed out that imported products are often cheaper, and the local industry lacks the competitive edge seen in more developed countries. Additionally, the limited incentives provided by the government have been removed.
This policy change by the CBN comes as an attempt to boost liquidity in the Nigerian Forex market and intervene when there is a scarcity of Forex. However, it has sparked a debate within the manufacturing sector, where stakeholders are worried about the potential adverse effects on local production and employment.
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