The leadership of the Manufacturers Association of Nigeria (MAN) has approached the Central Bank requesting direct sale of foreign exchange to its members.
If approved, the measure would require the apex bank by-passing the commercial banks to sell foreign-currency directly to the end users as a last ditch effort to keep the manufacturing firms afloat and safeguard jobs in the system.
The Nation learnt that MAN, which has about 2,700 members, proposed weekly auctions of dollars to manufacturing businesses at a meeting with CBN Governor, Godwin Emefiele in Abuja, the capital, during the week of February 22, according to Ali Madugu, a Vice President at the lobby group.
“We’re calling for the central bank to start giving to us directly, hand-to-hand, rather than through the banks,” Madugu, who is also managing director of Kano-based Dala Foods Ltd., a food processor, said in an interview in the northern Nigerian city on March 3. “Some of our member companies will run out of raw materials next month. Without restocking, what will happen? Thousands of jobs are on the line.”
Nigeria, which derives about two-thirds of government revenue from oil, has rationed dollars and brought interbank foreign-exchange trading to a halt since February last year in a bid to prevent the naira falling. The measures have all but pegged the currency at 197-199 per dollar. As dollars have become more scarce, the black-market exchange rate has plummeted to 310, while forwards prices suggest the naira will fall to 291 in a year.
The International Monetary Fund estimates the economy grew 3 percent in 2015, the slowest pace since 1999. Manufacturing is in recession, having declined during the first three quarters of the year. President Muhammadu Buhari and Emefiele have said that boosting employment in the manufacturing sector is crucial to reviving Nigeria’s growth.
Under the current system, the central bank sells foreign exchange to commercial lenders who then distribute it to their customers. That’s left manufacturers short since the banks often prioritize other businesses and individuals, Madugu said. The MAN hopes to receive a response from the central bank this week, he said.
“The banks have everybody as their customers,” Madugu said. “They even have people buying dollars for medical bills and school fees. If the central bank believes the economy must be diversified and manufacturing boosted, they should allocate directly to us.
