The Manufacturers Association of Nigeria (MAN) has raised concern on the Central Bank of Nigeria (CBN)’s recent reversal of foreign exchange (FOREX) restriction on importation of 43 items, noting that the move will have adverse effects on the economy.
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The Vice President of MAN, South-West Zone , Dr. Kamoru Yusuf stated this in an interview with newsmen in Ilorin, the Kwara State Capital, North Central Nigeria.
While describing the policy as an economic somersault, he noted that the major problem of the nation’s economy is the disparity between demand and supply in the FX market.
Yusuf said, “I want the federal government to know that the major problem at the moment is the demand that is higher than the supply in the FX market. Therefore, reversal of the 43 items is a policy summersault which is dangerous to our nation’s economy.”
He added that,“ the effect of the reversal and removal of ban on the 43 items will cause serious setback on the production sector thereby impacting negatively on virtually all other critical facets of human endeavours such as unemployment, youth restiveness, wrong declaration at the ports, importation and flooding Nigerian markets with substandard products and among all, proliferation of the nation with arms and ammunitions.
According to him, most financial institutions are really confused, and this policy if not quickly reversed, may lead to the distress of some banks while massive loss of jobs is looming and asked the CBN to seek the opinion of banks in Nigeria individually on this.
Speaking on the way forward, the industrialist suggested that the Federal government and the Apex Bank should pay close attention to free trade zone, Custom service as well as the mining and steel sectors.
He said, “Part of the possible solution is the immediate review of the policy surrounding the free trade zone in Nigeria which had been abused seriously and which adds little or no value to our economy in generating FX.
“Government needs to investigate and harvest the comprehensive list of the companies who register under the free trade zone inclusive of the value of their investments.
“It is observed that 60% of the goods coming into the country from Asia continents are finished products which can be valued around USD800 million of which some of them are substandard.
“As a result of this ,the Nigeria Customs Service is losing about N300 billion which was supposed to be generated through Duty Revenues every month which some of the aforementioned products were imported under the disguise of the free trade zone.
“Moreover, the law governing the Free Trade Zone prevents Federal Inland Revenue(FIRS) from generating taxes on all the goods brought in through the Free Trade Zones.
“It is worthy to note that these goods will be sold in naira and the importers want to repatriate the money back to their country in dollars and they have no other source of getting the money than to go to the black market window because the goods were brought into the country “dishonestly”.
“Therefore, they can afford to buy the dollar at any rate because they already have export rebates from their country for the finished goods exported to Nigeria.
He therefore advised Nigerian President, Asiwaju Bola Ahmed Tinubu to give the Minister of Trade and Investment the mandate to appoint an agency to look into the statistics and number of companies registered under free trade zone.
The Industrialist also recommended that President Tinubu should order the Nigeria Customs Service which has a robust platform to submit the list of importers who have been bringing goods into the country in the name of free trade zone and their respective value(s) since 2018-till date in order to justify the amount they have repatriated out of Nigeria in the name of Free Trade Zone without payment of duty or any form of taxes to Nigerian government.
“Even those expatriates that produce in the Free Trade Zone using our local mineral resources are not bringing dollars nor are they paying appropriate taxes to the Nigerian government instead, what they are doing is repatriating dollars out of the country.
“The President should make it as part of the KPI of the Ministry of Solid Minerals to list all the companies that are mining our minerals such as; Gold, Lithium and Tantalum among others and exporting them out of the country.
“They cannot make Nigeria the country of shipment and make their countries as the beneficiary of the FX because what we need is the proceeds of what they mined and they are to return back to our country in dollars.
“Steel sector plays similar role as that of Cement, Sugar, fertilizer and Petrochemical industries, all of which can provide the needed tripod-support for the development of other light industries in the country.
“The incremental and progressive results being witnessed by them was the outcome of the success story of the indigenous players in the cement industry over the past 9 years and with reduced stake from the offshore investors.
“The best model, is to indigenize and empower Nigerians and ensure that the strategy as encapsulated in the Nigeria Industrialization Revolution Plan (NIRP), creates avenues for whosoever wishes to partner with the local giants who have verifiable track record in the industry to do so.” He submitted.
It would be recalled that in June 2015, the Central Bank announced that some 41 items were “Not Valid for Foreign Exchange” because they could easily be produced in Nigeria rather than being imported into the country.
Some of the affected items include rice, cement, margarine, palm kernel, palm oil products, vegetable oils, meat and processed meat products, vegetables and processed vegetable products, poultry, tomatoes/tomato paste, soap and cosmetics, and clothes.
Other items include private aeroplanes/jets, Indian incense, tinned fish in sauce, cold rolled steel sheets, galvanized steel sheets, roofing sheets, wheelbarrows, head pans, metal boxes/containers, enamelware, steel drums and pipes, wire mesh, steel nails, wood particle boards, and panels.
Equally affected were security and razor wire, wood particle and fibre boards and panels, wooden doors, furniture, toothpicks, glass/glassware, kitchen utensils, tableware, tiles (vitrified, ceramics), textiles, wooden fabrics, plastic/rubber products, polypropylene granules, and cellophane wrappers.
The apex bank subsequently added fertiliser and maize/corn to the list of banned items.
However, it was noted that the CBN’s decision to lift the ban on the 43 items signifies a major step in resolving the country’s forex crisis.
The move, according to the apex bank, is part of the Nigerian government’s efforts to improve liquidity and stability in the market and attract foreign investors into the Nigerian economy.
Although the policy was widely applauded as well-intentioned and necessary, it has put additional pressure on the local currency and manufacturers, with ripple effects on domestic prices.
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