FG Pledges to Resolve $2.5b FX Forward Contracts Owed to Manufacturers

The Minister of State for Industry, Federal Ministry of Industry, Trade and Investment, Senator  Owan Enoh on Wednesday, promised to commence negotiation with the governor of the Central Bank of Nigeria (CBN) on resolving the unsettled $2.5 billion FX forward transactions owed to members of the Manufacturers Association of Nigeria (MAN).

Owan made the pledge in Lagos during a Town Hall Meeting that was organised by MAN and other members of the Organised Private Sector  (OPS) in response to the remark made by the President of MAN, Mr. Francis Meshioye, that some companies were on the brink of closure due to the CBN’s breach of FX forward contracts. 

He said: “I will get in touch with the governor of CBN so that we can begin discussion on this. I am not one who come to a session like this and listens to things like this without following it up with actions.

“So, I am going to see the CBN governor and whatever is the outcome I am going to share it with MAN and the OPS. ”

The minister also promised to assist manufacturers to buy gas at lower prices in order to enhance their competitiveness.

Owan acknowledged that President Bola Tinubu had taken some tough decisions to grow the Nigerian economy, but assured the manufacturers that he would collaborate with them to push a case for certain interventions that would be targeted at the industrial sector.

“This is a thing that we need to work together to see how we can achieve them. It is not going to be a sprint race but would require sustained efforts and incremental wins and enduring partnership to make it happen,” he said.

The minister said that monetary policies alone would not be enough to address the country’s economic challenges because fiscal measures are needed to resolve some challenges like low patronage of “Made in Nigeria” products facing the industrial sector.

He said: “There are lot of things to be done, including the will to put Executive Orders 003 and 005 into effect. How many industries are functioning below installed capacity just because there is no local demand?

“These things are not rocket science. They can be done. What is required iscommitment and the love of country.”

Owan noted that the Nigerian textile industry is almost “dead” and assured that the government would do something to resuscitate the sector.   

In his remarks, Meshioye said that the organised private sector was operating in an environment characterised by high interest rate, high energy crisis, multiple taxations, dilapidated infrastructure, high level of insecurity and excessive regulations by government agencies amongst others.

He said that there was need for the ministry to urgently address these challenges in order to restore the industrial sector to its strategic position, enhance wealth creation and increased economic development in Nigeria.

He identified high exchange rate as the major problem causing closures and exits of industries from Nigeria to other parts of Africa in the past few years.

He said: “To worsen the matter, the CBN refused to honour $2.5 billion forward contracts that are due to the industries. If this is not settled many companies will close. 

“It will also discredit them in getting further facilities from their suppliers. This breach of contract by the CBN has caused financial losses and operational disruptions.”

In his presentation themed: “Overview of the State of the Industrial Sector” during the town hall meeting, the Director General of MAN, Mr. Segun Ajayi-Kadir, said that Nigeria’s manufacturing sector had declined over the past few decades, which has raised concerns among industrialists.

Ajayi-Kadir attributed this situation to factors such as unstable economic indicators, high inflation, poor infrastructure, electricity challenges, and high cost of credit, Naira devaluation, foreign exchange shortages and multiple taxations.

“These have led to closure of companies, high unemployment rate and increase in crime rate. For instance, as at 2023, 335 manufacturing companies became ailing,” he said.

He also called on the CBN to engage the MAN with a view to revisiting the list of 43 items not valid for foreign exchange allocation.

 Dike Onwuamaeze

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