The Manufacturers Association of Nigeria, MAN, has frowned against the funding of Bureau de change market in Nigeria by the Central Bank of Nigeria, CBN.
Chief Frank Jacobs, President of MAN, said in a statement that it is difficult to understand why, in the first instance, the Bureau de change outfits should depend on official allocation of forex by the CBN for their survival.
Chief Frank Jacobs said, “The Bureau De Change market should provide alternative funding window to the economy, in which case they source their forex independently from other sources and supply to the forex market. It is difficult to understand their real functions with the kind of arrangement Nigeria has.
“They act as mere distributive conduit pipes by simply getting forex allocation from CBN and selling to very few Nigerians out of the multitude that need forex; thereby making their profit without much value addition”
“Foreign exchange allocated to the Bureau De Change as well as from other sources should be channelled to the productive sectors of the economy, especially manufacturing for the importation of essential inputs and machinery that are not locally available as well as the social welfare segment of the society like hospitals, schools, etc.”
The MAN president noted that the association advocates the use of guided deregulation in such a way that Naira would be left to flow freely within a bracket which the CBN would determine, adding that, this is important because at their stage of development, they cannot afford to allow the Naira to flow freely without any check.
“MAN believes that this arrangement will allow the exchange rate to be determined by the market but with some moderation and also leave room for investors to be attracted to invest in the country. This will also assist in checking the ugly situation that took place during the SAP era where, as a result of devaluation, over 60 per cent of small and medium scale industries closed down because of their inability to sustain their operations.
Restriction on dollar inflow should be lifted but this should not preclude CBN’s duty of investigating sources of such incomes” he said.
Jacobs noted that a major source of forex wastage in Nigeria is through the on-going subsidy on importation of petroleum products.
He said, “In the real sense, Nigeria should not have relied on fuel importation to meet the fuel requirement of the nation, given the number of refineries we have in this country which are currently lying waste. Instead, we turned around to import fuel and pay huge subsidies to fuel importers thereby wasting huge scarce foreign exchange as subsidy. MAN believes that the downstream petroleum sector should be privatized in order to save the country from wasting the huge forex paid as subsidy.”
He noted that some years back, many refining companies applied for licenses and nobody knowss what happened to those applications or why those companies that were granted licenses did not start operation?
“Why does the Government have to subsidise fuel imports when such subsidies, some of which are even ambiguous, would have been channelled to streamlining the refining capacities of existing refineries or even establishing new ones? The solution appears to tilt towards the privatization of the sector so that Government would hands off subsidy payment.
“To avoid perceived abuse of foreign exchange allocation and save the Naira, the management of forex which is vested on a Committee chaired by the Governor of the CBN should monitor utilisation of forex by recipients by remitting funds directly to the beneficiary company overseas,” he said.