- MAN, other stakeholders should cooperate with CBN in the national interest
For the Central Bank of Nigeria (CBN), last week heralded a slew of new measures to save the naira and to improve exchange rate stability. First, it says it will no longer approve payment of foreign exchange to Form M applicants who do so through a company and agent. The circular, directed at authorised dealers, says in part: “As part of continued efforts by the Central Bank of Nigeria to ensure prudent use of foreign exchange resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges, and avoidable costs that are ultimately passed to the average Nigerian consumers, authorised dealers are hereby directed to desist from opening of Forms M whose payment are routed through a buying company/agent or any other third-parties”.
“All authorised dealers” the circular further said “are hereby requested to only open Form M for letters of credit, bills for collection and other forms of payment in favour of the ultimate supplier of the product or service” just as a Product Price Verification Mechanism is under way to forestall over-pricing and/or mispricing of goods and services imported into the country.
Twenty-four hours after, the apex bank also read the riot act to exporters that failed to repatriate their export proceeds. It directed all banks to submit their names, addresses and Bank Verification Numbers (BVN) for possible sanctions – stressing that its Foreign Exchange Manual provided that all exporters should repatriate export proceeds back to the country to support the local currency and boost the economy.
Although dictated by the current exigencies of declining foreign exchange accretion, the measures are by no means extra-ordinary. In fact, if we understood the latter as a necessary part of the rule-based forex management system which the apex bank is routinely expected to enforce, the former has become even more compelling to curb extant abuses that members of the organised private sector have long indulged in.
Expectedly, the Manufacturers Association of Nigeria (MAN) has expressed sundry reservations about what the measures forebode for its members. MAN says that most manufacturers, especially SMEs, deal with accredited agents for their supplies, since many Original Equipment Manufacturers (OEMs) do not sell directly to individual buyers. Many of its members, it further noted, “had gone into contractual agreements via the procurement agencies for the 2020 financial year and, in some cases, beyond, hence, a default on the contractual obligations may result in expensive law suits across jurisdictions, bring disruptions to the production process and further undermine the resilience of the sector”.
No doubt, these fears would appear legitimate. Yet, these fly in the face of current realities of massive disruptions in the global supply chain of which no supplier – not least the OEMs – are exempt. Moreover, for MAN and other operators in the real sector, their chief concerns at this time should be how the current arrangement serves not just the needs of their members of the manufacturers body, but the larger economy. In other words, rather than dissipate energies at kicking at a measure which we have long argued is borne of exigency, what MAN and other bodies should be doing now is collaborate with the CBN to ensure that the Nigerian economy, which they primarily exist to serve, as against the interest of foreign agents, is best served at this very difficult time. Nothing of course says that MAN and other stakeholders can’t further engage the apex bank with a view to smoothening those grey areas that they find impossible to navigate; only that this must be guided strictly by the nation’s best interests at this time.
As we noted in a previous editorial, the current times call for prudence and pragmatism. And just as a reset of the economy is dictated, the least our operators can do is show understanding for the efforts by the CBN to realign the economy.
