The Nigerian central bank’s creation of a market-driven foreign-currency window has given hope of revival to manufacturers faced with closure or shrinking capacity by easing their raw material imports, an industry group said.
“The recent pronouncement of the central bank comes as a relief,” Segun Ajayi-Kadir, director-general of the Manufacturers Association of Nigeria, said in a May 3 interview in Lagos, the commercial capital. “If the intervention is sustained, there’s no doubt that we will have continued improvement in sourcing raw materials.”
The Central Bank of Nigeria on April 24 opened a new foreign-exchange trading window where currencies sell at market rates. That eased access to foreign currency that’s been restricted since last year as the bank limited the supply of dollars with the country struggling to cope with lower revenue after the price of oil, its main export, fell more than half from mid-2014. The economy contracted in 2016 for the first time in 25 years as output shrank.
The regulator said late Thursday that its decision announced earlier in the day to increase dollar supply to small importers didn’t include 41 items, ranging from toothpicks to plastics, previously banned from accessing foreign exchange from the inter-bank market. It leaves a key demand of the manufacturers’ association unmet.
The restrictions “have created a problem for us because some of those items are raw materials that our members require to run their factories,” Ajayi-Kadir said. “A few companies folded, especially those in plastics and those in glass; some companies also had to downsize because they were not operating at full capacity.”
Industry, Trade and Investment Ministry officials didn’t immediately respond to a phone call and a message for comment on the measures and their likely impact on industries.
Manufacturing companies expect measures that will improve what is currently a difficult business environment, according to Ajayi-Kadir.