Ukatu urges CBN to create a window to help genuine manufacturers’ access forex

The Central Bank of Nigeria (CBN) has been called upon to create a window that can help genuine manufacturers access forex with ease as many manufacturing industries are shutting down as a result of their inability to access forex.

Sir Afam Mallinson Ukatu, Managing Director of NISPO made this appeal while speaking at Commence and Industry Correspondent Association of Nigeria (CICAN) workshop and annual Award with the theme “Impact of Forex Crisis on the Real and SME Sectors” held in Lagos.

Ukatu stated that the manufacturing and steel industry is facing lots of problems, regarding accessibility to foreign exchange to buy raw materials and also the spare parts.

“If you are not able to have access to forex, in order to buy those items, you are collapsing the factory. The CBN hasn’t done much in this area. MAN has been advocating that the CBN should create a window that can help genuine manufacturers’ access forex with ease but to no avail.

“We are appealing to the government to make an investment friendly monetary policy to prevent the total collapse of industries,” he said.

He disclosed that it is becoming so obvious that it has affected so many industries, basically because of the high exchange rates of which some have to go out of the way to buy from the parallel market to continue in production.

According to him, “If you have a loan running with the commercial banks, and Bank of Industry (BoI) for example, there is no way you will allow your factory to shutdown, because you must service the loan facility, so you have to find a way or the other to get your spare parts and raw materials. But when you are not getting forex from CBN windows, definitely, you have increased your cost of production by 25% – 30%.

“So, if it is a business that has a small margin, all your projections you have done for the year would be gone. We are still pleading and asking the government to do something to help finance raw materials and spare parts,” he appealed.

Managing Director of NISPO also revealed that they have been advocating for a means of unification of gas prices, in terms of paying in local currency, or pegging it at a fixed rate because it is meant to be for manufacturers to no avail.

Anytime manufacturers are getting gas at a fixed rate of ₦400 per Dollar for instance, he said, we can plan with it, but as at today, the devaluation of Naira and with the dollar continuously going up, the rate of gas has increased and the Manufacturers are at the receiving end.

In his words: “Therefore, there is a need to have a system whereby we pay for gas consumption in Naira at fixed price and not by conversion to CBN official exchange rates.

“But if the government can give it as a rebate to the manufacturers, it will be a welcome decision. The truth about this is that not all the gas concessioners are getting it at the same rate. Some are getting it cheaper based on the arrangement they have made over time.

“We the manufacturers are trying to see how we can get a cheaper source of gas and a cheaper means of production.

“There is a need for a survey to find out how genuine manufacturers are paying for gas and to compare it to what other people are paying. There is the need to have a level playing field; otherwise Nigerian manufacturers would be worse off.”

He complained that he has been fighting the issue of double taxation, but yet to yield the required result, adding that unfortunately, the government failed to understand that the size of factor does not determine the size of tax you pay.

The government agencies and revenue generators, he said, will see the size of the factory that is about to close down, and slam it with the amount of tax that you cannot afford.

The government should understand, he added, that these manufacturers have done the investment by themselves, build the road themselves, generate power themselves, yet the government wants them to pay all forms of taxes.

He also bemoaned a situation whereby the government will be demanding for the revalidation of the company’s C of O, and asked to pay a very high percentage of what had been paid for over years on a titled document that had been certified long ago.

“I ask if we still have to pay for what we have paid for in the past 10 years. It is not done anywhere in the world. This is a policy that is taking people out of business.

“We have pleaded that it is not viable. This is bad, for a government that has been in office for 8 years to have issued Certificate of Occupancy (C of O), and another one comes into the office and starts requesting for revalidation, asking for the amount you could not even pay when you were acquiring that property.

“The policy is frustrating. Abuja and a couple of other places did their validation at little or no cost. We are begging the government of the western states to reconsider such policies,” he revealed.

Speaking on the African Continental Free Trade Area (AfCFTA), he noted that it will be an eye opener to MAN, NACCIMA and other members of the Organised Private Sector (OPS) to see what other countries are doing and come up with blueprint to be our facilitators to the government to work in line with what is obtainable in other competitive markets we are into now.

He hinted that if our businesses will remain, we have to revisit our policies as well as understand what is going on in South Africa through the support they are giving to manufacturers.

“Competition is good when there is a level playing ground, if this is not done, that means manufacturing may be a thing of the past in Nigeria.

“We are praying that now that there is open door policy to export and to buy where you can, so we have to do some other things that others are doing in their own country to support manufacturing to be able to compete in AfCFTA.

“It is not about going to South Africa for a trade fair, looking for investors. Investors will come if there is a fair weather ground to do the business that must be free of insecurity, there must be good roads to ply, there must be friendly gas prices and if all these are put in place, then we are ready for business, because the cost of labour in Nigeria is cheaper than other countries,” he concluded.