Amid Naira Floatation, MAN Braces Up For Rising Import Costs

The Manufacturers Association of Nigeria, MAN, has braced up for rising imports cost and foresees economic uncertainties and exchange rate volatility due to the difficulty in predicting future exchange rate movements, due to the floating of the Naira.

This was disclosed by Mr Segun Ajayi-Kadir, Director General of MAN in an interview recently.

He added that floating exchange rates make economies more susceptible to external shocks.

Ajayi-Kadir added that despite several economies practicing floating exchange rates, the outcome of the policy was often mixed as observed in these countries and the impact on the Nigerian economy at large would be different, however, he expects a deceleration of foreign exchange scarcity as currency arbitrage activities would drop.

“On the challenging side, we expect increase import costs and currency depreciation may reduce import flows, which is bad for manufacturers that depend on raw materials not locally available.

“Also, we foresee economic uncertainties and exchange rate volatility due to the difficulty in predicting predict future exchange rate movements and planning accordingly.

“Also, floating exchange rates make economies more susceptible to external shocks.”

The MAN Chief, however, noted that in the long run, it would boost-competitiveness of Nigeria’s export and lead to improved market efficiency for adequate foreign exchange access and a rise in capital flows.