As Nigeria grapples with falling revenue and depreciating oil prices, members of the organised private sector have expressed worry about the weakening exchange rate.
They have also warned that many factories may shut down if outstanding obligations of over one year to foreign suppliers are not met as the Central Bank of Nigeria tries to unite the foreign exchange rates.
Already, Nigeria’s foreign trade volume fell from N10.12 trillion in the Q4 2019 to N8.30 trillion in Q1 2020, according to the latest report from the National Bureau of Statistics (NBS).
According to the Manufacturers Association of Nigeria (MAN), while the move is gratifying, the apex bank should urgently put a measure in place to minimize the intensity of the pain by considering outstanding obligations of manufacturers from the second quarter 2019 till date.
To them, the outstanding obligations given at N345/$ prior to the unification should be given the privilege to be settled at between N330 and N360/$, to enable banks to redeem these obligations to foreign suppliers of manufacturers. If not done, MAN said many factories may close shop, and CBN stimulus packages to the manufacturing sector will suffer a huge setback, as cash flow crunch becomes the order of the day.
MAN, in its position on the matter noted that it is important to recognize the existence of the unavoidable pains that naturally come with the transition from a multiple exchange regime to the domain of a single exchange rate, particularly the burden of dollar-denominated loans, and offsetting existing credit commitments to foreign suppliers of raw materials.