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By Merit Ibe, [email protected]
Stakeholders in the real sector have decried the lingering forex squeeze and proffered solutions to ameliorate the effect on businesses.
They gave their opinions during an annual workshop and awards organised by the Commerce and Industry Correspondents Association of Nigeria (CICAN) in Lagos, with the theme: Impact of Forex Crisis on the Real Sector and MSMEs.
They decried the impact of the crisis on real sector operators, which has also been a major challenge to investors in the economy.
According to them, the crisis has made planning, dividend repatriation difficult due to uncertainty, thereby creating huge backlogs.
They lamented that at this point, investors are compelled to patronise the parallel market at a more prohibitive exchange rate.
The key note speaker, Dr Muda Yusuf, Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE) said the challenges of forex on the real sector were in three dimensions, which include the sharp depreciation of the currency, liquidity crisis in the foreign exchange market and volatility of the exchange rate, which creates considerable uncertainty and unpredictability for investors.
“Due to constrained forex, capacity utilisation has been impacted which has posed a risk to the business continuity.”
In managing forex policy, Yusuf noted that sharp depreciation of the naira exchange rate in the parallel market is a trend that should not be allowed to continue, saying necessary steps need to be taken urgently to stem the tide, calling for an urgent review of the current foreign exchange policy. He proposed that a flexible exchange rate policy regime be adopted to cope with changing demand and supply conditions in the forex market, among other benefits of the regime.
He pointed out that adoption of a flexible exchange rate regime would improve liquidity in the forex market, reduce uncertainty and enhance investors’ confidence.
“It will deepen the autonomous foreign exchange market through the liberalisation of inflows from export proceeds, diaspora remittances, multinational companies, donor agencies, diplomatic missions etc.”
Afam Mallinson Ukatu, Managing Director of NISPO and also a member of the Manufacturers Association of Nigeria (MAN) noted that the association would continue to advocate proper policy implementation that will enhance manufacturing positively.
Ukatu said the manufacturing and steel industry were facing lots of problems, regarding accessibility to foreign exchange to buy raw materials and also the spare parts, adding that not accessing forex to buy those items, is forcing factories to collapse.
He also said the association has been advocating that the CBN should create a window that can help genuine manufacturers access forex with ease but to no avail, saying “the CBN hasn’t done much in this area.
The manufacturer appealed to government to make an investment-friendly monetary policy to prevent a total collapse of industries.
For his part, Chris Chidume, Managing Director/CEO Krisoral Group, said for the forex challenge, stakeholders have to look inwards, run a lean manufacturing process and give value to everything.
He noted that the theme was apt and that CICAN would continue to advocate proper policy implementation that will enhance manufacturing positively, especially the issue of forex. The forex market in Nigeria he said is characterised with different rates from open markets and the disparity is so obvious that some people now see it as a business of getting the money from the apex bank and reselling to others.
Chidume noted that the challenge of forex is one, but beyond forex, there are other challenges. (Apart from forex, businesses are also contending with the environmental factors, social factors, political factors and all these factors are targeting established businesses. So, for you to survive in our environment, you will have to consider all these factors.
