The manufacturing industry requires the injection of about $1bn to galvanise activities in the sector and enable it to contribute significantly to the economy, the Manufacturers Association of Nigeria has said.
The President, MAN, Dr. Frank Jacobs, who said this in an interview with our correspondent on Thursday, however, commended the Central Bank of Nigeria for its recent interventions in the forex market targeting critical sectors.
In October, the apex bank released $314m for forward payment to clear a backlog of forex requests by operators in the manufacturing, agriculture and aviation sectors.
The central bank also settled $270.6m in notional value of the matured October 26, 2016 futures instrument.
In line with the trend since the introduction of the Over the Counter forex futures, the central bank issued a new 12-month tenor instrument (October 25, 2017) worth $1bn at N258.50/US$1.00 to replace the maturing instrument.
The apex bank in a release had stated that it was intervening in the forex market through the Special Secondary Market sales.
It stated, “In order to further engender market confidence, ensure access to FX by end users and sustain the integrity of the Nigerian inter-bank FX market, the CBN has resolved to intervene in the inter-bank FX market through forward settlement.
“This is an important one-off exercise dedicated to the clearance of the backlog of matured FX obligations for: raw materials and machineries for manufacturing companies; agricultural chemicals; and airlines.”
In November, the apex bank injected another $500m into the market specifically for the manufacturing sector.
Jacobs said, “I am happy that they are becoming more sensitive to our needs. The $500m will help but not in a very significant way. It is going to take a lot to satisfy the forex demand of the manufacturing sector. If $1bn is allocated to the sector, it will make a significant difference, especially now that the operators are looking inwards for raw materials.”
Meanwhile the MAN president has expressed regret at the decision of an indigenous tomato paste manufacturer, Erisco Foods Limited, to exit Nigeria.
The Chief Executive Officer of Erisco Foods, Chief Eric Umeofia, on Tuesday announced that he was winding down his business following the expiration of a 30-day ultimatum that he had issued on October 11 to relocate his factory outside Nigeria if nothing was done by the CBN to address the forex shortages.
Apart from the inability to access forex, he listed other threats to his business in Nigeria as huge cost of manufacturing tomato paste locally and influx of imported tomato paste.
Jacobs said, “It is quite unfortunate. I sympathise with the workers who will be out of work. We appealed to him (Umeofia) not to leave Nigeria but he is obviously very aggrieved.”