The Manufacturers Association of Nigeria has called on the Central Bank of Nigeria to put a measure in place to minimise the intensity of the pain foisted on its members by the recent introduction of the unified exchange rate of the dollar.
The association spoke through its president, Mansur Ahmed, in a statement made available to our correspondent on Thursday.
The CBN on Tuesday adjusted the value of the naira to exchange to the dollar at N381.
This was considered as a part of measures to converge the nation’s multiple exchange rates and ensure stability.
Although the CBN has not officially made its position known, data gleaned on the website of FMDQ OTC Securities Exchange on the CBN official rate showed a 5.54 per cent change from N360/$ to N381/$.
However, MAN said it became imperative for the CBN to act quickly, considering outstanding obligations of manufacturers from the second quarter of 2019 till date given at N345 to a dollar prior to unification and allowed such to be settled at between N330 and N360 per dollar.
This done, Ahmed said it would enable banks to redeem these obligations to foreign suppliers of manufacturers.
He said the association had always advocated a unified exchange in order to ensure stability in the economy among other benefits, and commended the CBN for the bold step.
He said, “This is a welcome development that should engender increased investment inflow into the real sector of the economy and a laudable initiative that has come at the right time.
“Particularly now that the economic outlook is gloomy in the light of the impact of the ravaging COVID-19 pandemic that has culminated in uninspiring macroeconomic situations.
“However, it isimportant to recognise the existence of the unavoidable pains that naturally come with the transition from a multiple exchange regime to the domain of a single exchange rate.
” Particularly the burden of dollar -denominated loans and offsetting existing credit commitments to foreign suppliers of raw materials.
“CBN should as a matter of urgency, put a measure in place to minimise the intensity of the pain by considering outstanding obligations of manufacturers from the second quarter 2019 till date given at N345 to a dollar prior to unification and allow such to be settled at between N330 and N360 per dollar.
“This is to enable banks to redeem this obligation to foreign suppliers of manufacturers.”
Ahmed said if this was not done, “many manufacturing factories may close down and CBN stimulus packages to the manufacturing sector will suffer a huge setback as cash flow crunch becomes the order of the day.”
Drawing from basic knowledge of the transmission mechanism of exchange rate management and experiences of Cuba and India, the MAN boss said the current forex unification agenda would entrench convergence, and enhance exchange rate stability.
He added that it would also boost investors’ confidence, control rising inflation and promote transparency.
He noted that the adjustment must have been motivated by the intention of the apex bank to merge the exchange rate around Investors & Exporters window where the naira is weaker.
He also wanted the CBN to develop appropriate implementation strategy that would engender a successful transition from the current multiple windows to a single efficient one.
He said the strategy should limit the short-term pains until efficiency gains materialise by responding swiftly with an inward- oriented rescue guideline and “seek to boost the pace at which such efficiency gains materialise. “