Business

Forex: ‘More companies to fold up in 2017’

By Omodele Adigun

There is fear that unemployment rate may jump next year as more companies  may close shop due to their inability to source foreign exchange (forex) for raw material importation.
According to the Managing Director of May & Baker Plc, Mr Nnamdi Okafor, who dropped the bombshell Tuesday in Lagos, the forex situation has gone out of hand as manufacturing outfits are being buffeted with myriad of challenges triggered by the forex drought.
These include inability to source credit, lack of forex to import the much-needed raw materials and foreign exchange loss.
“The forex situation has gone beyond  what we can wiggle. And by the first quarter of next year, most factories that are still standing will begin to shut down because the situation with forex has actuallhy gone worse in the last six months,” he said.
Comparing with the situation in earlier in the year, Okonkwo explained that it was a bit better in the first half of the year because “you might get, maybe, 20  or 30 per cent of your forex requirement. But in the past six months, we have not got anything. So what that means is that, as I speak to you, we have not been able to order materials that normally by now, it should be sailing into Nigeria. We have not ordered them for next year.”
He added: “The implication of this is that we have lost credit from our suppliers. Nobody outside Nigeria is willing and ready to give us credit. It is also having some impacts on cost of imput materials because you have to borrow money, you have to pay cash before you get supplies. And to pay cash, you have to borrow. Banks are not willing to  even lend. And when they do, it is at very high rates. So this has had a very huge impact on the cost of our products.
“Another major impact is the exchange rate loss. We are going to lose a lot of money from the LCs that we established, and goods supplied to us, that we converted and sold. And at the time we were about to pay for those materials, we have to buy forex at much higher rates. This will have some significant impacts on our bottomline.”
Recall that the Central Bank of Nigeria (CBN) recently, said it has so far granted $1.53 billion to 9,134 companies through.
But Okonkwo  slammed the publication, saying that is not happening. “So we are not able to bring in our packaging materials. In fact, that we survive this year is a miracle,” she said

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