To the Manufacturers Association of Nigeria (MAN), the current times are such that demand extraordinary measures. Speaking at its breakfast meeting in Lagos last week, the body’s national president, Mansur Ahmed, called for a separate forex window for its members to bring in raw materials on the grounds that the current regime where forex is allocated to both importers of finished goods and raw materials importers at the same rate in the same window is a disincentive to the real sector. “We cannot source foreign exchange to bring in raw materials because the dollars have gone too high. Today, the exchange rate is at over N620/$. How would you be able to produce at that exchange rate and still be able to sell? There will be no market,” he said.
Interestingly, MAN also believes that such extraordinary measure should not be restricted to the forex arena alone. The body advocates a similar radical measure to stem the rising cost of diesel which some of the members had reported as hitting N1,100/litre in some parts of the country. To this, MAN would pose the rhetorical question: “How can a manufacturer survive that?”
The MAN chieftain also referenced the body’s earlier entreaties to the government to allow importation of diesel from neighbouring Niger Republic to cushion the impact of rising prices on production, which he claimed had met a brick wall.
“We need to sustain our manufacturing and for us to do it, we need the government to give us the right environment. The biggest challenge we face today is the complete absence of infrastructure. Without infrastructure, there is no way you can manufacture,” he had noted of their situation.
That these are extraordinary times is merely stating the obvious. Even without the latest spiral of inflation, crises of exchange rate and energy, the lot of the Nigerian manufacturer has been anything but enviable. What the current crises have done is to knock the bottom off the sector already known to be endangered.
To that extent, MAN is in order to press the case of its members. In fact, the survival of the sector, as indeed the entire economy, may come to depend on concessions and other such forbearances that the government is able to grant them at this difficult time. Being in good stead to articulate the general concerns of the real sector in which it is a leading player, the body’s regular observations obviously deserves to be taken seriously. The issue is whether the ad hoc measures proposed would actually benefit the larger economy.
On the first suggestion, the problem is how it could be achieved without creating a monstrous cartel of speculators that would prove just as problematic if not impossible to manage in the end. Simply because the problem is shortage of forex, the apex bank already has its hands full in ensuring that those truly deserving have access to available forex. A new forex window at this time will not only create another layer of bureaucracy (and possibly corruption), around the process, it will surely open the floodgate for other interest groups to make their own cases.
On the other hand, the proposal on diesel is worth pursuing provided that the country, Niger Republic, has sufficient stock to share.
Howbeit, the two issues, it needs to be understood, stem from the same premise of a monumental failure of government to plan for the future – the failure to diversify the economy to guarantee multiple sources of forex, and the failure to ensure that the nation’s fuel needs are met through domestic refining. Short of a miracle, it’s hard to see an enduring way out of the problem in the short term. We urge that the government puts on its thinking cap if only to address the problem holistically.
In the meantime, a more practical approach would be for MAN and other similar bodies to request the government for tax waivers and other sectoral incentives to enable them tide over the current crisis.