The country’s lingering foreign exchange scarcity has worsened, even as the parallel market exchange rate has crept closer to N590/$1, The PUNCH has learned.
According to the Manufacturers Association of Nigeria, the development may result in massive job losses in the manufacturing industry, among other sectors.
The development comes more than eight months after the Central Bank of Nigeria suspended the sale of foreign currency to Bureau de Change operators and promised to increase liquidity in commercial banks.
On the black market, the exchange rate on Tuesday was N585/$1 and N785/£1, compared to N582/$1 last Friday.
This comes on the heels of banks restricting customers’ access to forex by imposing a monthly limit of $20 for online transactions.
Insiders told The PUNCH that things could get worse as electioneering heats up, and that politicians have begun to mop up dollars, driving up demand.
The naira will continue to fall because those in need of dollars will turn to the parallel market, increasing demand.
It’s also one of the consequences of an election year. We are not earning as much foreign currency and will have to spend more money on gasoline subsidies. “Ultimately, the gap between the import and export window and the parallel market will widen,” a government official who requested anonymity said.
Mr. Bismarck Rewane, Chief Executive Officer of Financial Derivatives Company, predicted in January that the CBN would devalue the naira by the end of 2022, adding that spending on political campaigns ahead of the 2023 general elections would put additional strain on the Nigerian economy’s foreign exchange supply.
Manufacturers and travelers who are frustrated have already been forced to use BDC operators more frequently than before.
It was discovered that banks were only able to meet about 30% of their customers’ demands in some cases.
“I used the CBN portal to apply for a $5,000 Business Travel Allowance.” “However, my bank said it could only give me $2,000,” a businessman who wished to remain anonymous said.
However, it was discovered that the experiences of manufacturers were far worse.
“Never in a million years would I have imagined Nigeria getting to this point.” How do you explain a manufacturer who had an invoice for $425,000 to import materials but only received $210 from the CBN? “I can’t even wrap my head around it,” Bola Adefila, Chief Operating Officer of Banrut Rolls Nig Ltd, said.
It was learned that the MAN had begun reaching out to the Federal Government for immediate intervention, despite the fact that the rising cost of diesel has made doing business more difficult.
In an interview with The PUNCH, MAN Director-General Segun Ajayi-Kadir stated that manufacturers now rely on the parallel market for foreign exchange.
According to Ajayi-Kadir, the high cost of diesel and the scarcity of foreign currency have significantly increased the cost of production, and employers may be forced to lay off some workers in order to cope with the new realities.
He also suggested that the northern land borders be reopened to allow fuel marketers to import diesel from neighboring countries such as Niger and Chad, both of which have operational refineries.
“Absolutely yes,” he said of job losses. It is extremely difficult, particularly for small-scale industries, because if you are not producing, how will you pay your employees? As a result, industries may be forced to ‘right size.’ That is why we are conducting all of these consultations in order to gain the attention of the government.” The scarcity of forex is also unfortunate because it disproportionately affects the manufacturing sector. The manufacturing sector has a multiplier effect on the economy and should be prioritized. In the face of enormous demands, our members are given ridiculously low amounts.
“We require forex to purchase materials and spare parts that are not available locally.” We were encouraged when the CBN stated that it would stop allocating forex to BDCs in order to put more money into banks, but this has not occurred. We went to BDCs for more than 90% of our needs. When you request $400,000, you are given $2,000 instead. You ask for $1 million and are given $50,000. “This is absurd.”
