MAN Calls for Caution at the Untoward Practices of Commercial Banks Regarding Unmet Forex Forward Obligations

• Urges CBN to speed up the long overdue redemption of the unsettled forex forward

The Manufacturers Association of Nigeria (MAN) has expressed deep concerns regarding the unwholesome treatment of its members by some commercial banks in Nigeria regarding unmet foreign exchange (Forex) forward obligations.

A statement signed by Segun Ajayi-Kadir mni, Director General Manufacturers Association of Nigeria, highlighted that as a vital sector of the economy, manufacturers rely heavily on access to Forex for the importation of essential raw materials, machinery, and equipment that are not locally available.

Ajayi-Kadir disclosed that the recent developments have shown a troubling trend in the way banks are handling the matter, to the extreme detriment of manufacturing industries who have the needless misfortune of being at the receiving end of a problem they didn’t create and shouldn’t suffer.

“Recently, our members have reported significant unwarranted complexities and undue highhandedness by the banks. Many have faced stringent requirements that are not aligned with the Central Bank of Nigeria’s (CBN) guidelines, resulting in unnecessary bottlenecks and illegal freezing of their corporate and personal bank accounts, with negative impact on production, which could threaten the sustainability of manufacturing operations.

“A worrisome case in point is the ongoing forex forward related dispute involving KAM Industries Nigeria Limited, a leading manufacturer in the steel sector in West Africa and a member of the Association, and one of the commercial banks in Nigeria. This rather unfortunate treatment of private business is only the reported one, and there are several others undergoing similar harrowing experiences. This should stop in the interest of economic development of Nigeria, job security and business sustainability,” DG MAN stated.

The umbrella body for manufacturers clarified the position of its members with respect to the subject matter involving commercial banks and the Central Bank of Nigeria, thus: “As it is the norm, commercial banks receive payments in Naira either through direct remittance from their customers or credit facility for the purpose of securing FX for raw-material importation. Upon receipt of these funds or grant of credit facility, the banks then remit the Naira to the Central Bank on behalf of their customers. And from that point, the funds are deemed to be held by the apex bank, thereby completing the customers’ obligations.”

MAN asserted that its members are not liable for delays or complications arising after the remittance of funds to the CBN by commercial banks, adding “Our members have played their part and the commercial banks should play their own part. Our members should not be harassed by the banks. The banks should show understanding and be supportive as we all seek a solution to this rather unfortunate and unexpected impasse. As the innocent one and quite evidently the weakest and most vulnerable in the tripod, it is unconscionable that manufacturers are bearing the brunt.”

The Association called on the Central Bank of Nigeria to direct the concerned commercial banks to immediately unfreeze the accounts of innocent manufacturers in relation to the vexed issue of forex forwards.

“We reiterate our call on the Central Bank of Nigeria to speed up the long overdue redemption of the unsettled forex forward, as a lasting solution to the dilemma.

“We reiterate the readiness of MAN to engage with the banks and other stakeholders to co-create the solutions that will facilitate the timely resolution of the long-drawn impasse. Commercial banks and manufacturers should be partners that collaborate to build shared prosperity for the nation, not adversaries.

“The Manufacturers Association of Nigeria remains committed to advocating for the interests of its members and will continue to work tirelessly to ensure a favourable business environment for manufacturers in Nigeria.

“We remain open to fostering dialogue between the commercial banks and affected members of the Association. This is with a view to ending the forex forward imbroglio which has brought untold hardship on manufacturers and could potentially trigger a slide towards de-industrialization of the country,” the statement emphasized.