Forex restriction cripples import community

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Forex

THE June 23, 2015 foreign exchange restriction slammed on 41 imported items by the Central Bank of Nigeria (CBN) may have eventually consumed several business concerns as predicted by some economic experts.

The casualties, mostly import­ers and Customs agents, said they saw their volume of import falling to a point of no redemp­tion due to the CBN restriction. They could not access forex from the CBN to operate any more.

Consequently, many busi­nesses within the nation’s im­port community have force­fully closed shop, thus throwing thousands of people hitherto employed into the saturated job market.

Though some economic ex­perts have hailed the forex re­striction policy as it seeks to help conserve foreign reserves, facili­tate the resuscitation of domestic industries and generate employ­ment, other stakeholders insist such a move should be gradually executed to ensure local produc­tion is fully attained, thereby giving those likely to be affected room to adjust accordingly.

Meanwhile, maritime stake­holders say there is tension within the seaports as many im­porters, agents and other stake­holders have been without jobs for several months making the Yuletide and celebrations around it look like a nightmare.

Their argument was that the policy has led to a drastic reduc­tion in import volume and reve­nue generation because forex has been generally difficult to access even for imports outside the 41 items listed by the CBN.

According to Lucky Amiwe­ro, the President of the National Council of Managing Directors of Nigerian Licensed Customs Agents (NCMDNLCA), access to forex even for items not on the restriction list is also a major challenge.

“This forex issue is causing real tension in the industry. Some companies that can’t access forex for many months have closed shop and it’s not for the year; I mean, they have gone and will never come back to the ports. The companies are dead. Go to the ports, people sit idle doing nothing. The government should sit down and articulate its fiscal and monetary policies because with the death of those compa­nies, people have been laid off and they have families. There is already massive unemployment and with this development, there are real problems on our hands. Everyone is complaining, in­cluding local manufacturers who need forex to import materials. We can’t continue like this,” he lamented.

Operators in the maritime sec­tor have predicted that additional 1,000 jobs might be lost in Janu­ary 2016 if President Muham­madu Buhari does not lift the foreign exchange restriction on the 41 imported items marked as ‘Not Fit for Forex’. These include rice, cement, margarine, meat and processed meat prod­ucts, vegetables and processed vegetable products, poultry chicken, eggs, turkey, private airplanes/jets, Indian incense, tinned fish in sauce (geisha/sar­dines), cold rolled steel sheets, galvanised steel sheets, roof­ing sheets, wheelbarrows, head pans, metal boxes and contain­ers, enamelware, steel drums, steel pipes, wire rods (deformed and not deformed), iron rods and reinforcing bar, wire mesh and steel nails, wood particle boards and panels, wood fibre boards and panels, plywood boards and panels, wooden doors, toothpicks, glass and glassware, kitchen utensils, tableware, tiles (vitrified and ceramic), textiles, woven fabrics, clothes, plastic and rubber products, polypropyl­ene granules, cellophane wrap­pers, security and razor, wine, soap and cosmetics, tomatoes/ tomato pastes and eurobond/ foreign currency bond/share pur­chases.

Already, the situation has hit hard on the terminal operators who are grappling with drastic reduction in cargo volume lead­ing to staff lay off following in­ability to pay salaries and other emoluments.

Recently, AP Moller Termi­nal (APMT) located in Apapa, sacked 300 out of its 1,000 work­force.

The company, reputed to be the biggest container terminal in West Africa, said the sack was in reaction to the frightening crash in cargo volume.

It also said the sack was also ne­cessitated by the continuous fall in global crude oil prices $114 per bar­rel since the summer of 2014 to less than $50 a barrel in October 2015.

The company noted that the de­velopment had taken a toll on the Nigerian economy and impacted on its staffing requirements.

The General Manager, Commu­nication and Sustainability at the company, Mr. Austine Fischer, in a statement quoted the company’s Head of Human Resources, Ms. Bunmi Pratt, as saying: “With cargo volumes down 30 per cent com­pared with a year ago, and even af­ter extensive cost-cutting measures taken throughout the terminal, we are unfortunately being forced to reduce our staffing in view of the business realities of the current eco­nomic environment.

“Nigeria, with oil and related petroleum products representing more than 90 per cent of total ex­ports or approximately $90 billion in 2014, and the bulk of govern­ment revenue, has seen auster­ity measures permeate the national and local economies. A sharp drop in demand for consumer goods has been particularly acutely felt at APM Terminals, Apapa, which handles over half of all Nigerian imports,” she said.

Also, Port Terminal Multiser­vices Limited (PTML), a subsid­iary of Grimaldi, also sacked about 300 of its workforce in May over low cargo traffic.

Similarly, the sack fever has al­ready gripped workers in other port terminals who fear that some of them may be laid off soon due to the adverse economic situation.

Former President, Lagos Cham­ber of Commerce and Industry (LCCI), Alhaji Remi Bello, in the pronouncement over the forex re­striction by the CBN, expressed concerns on the unintended con­sequences of the apex bank’s ap­proach to the management of for­eign exchange market.

He said many of the products on the list of the 41 products are intermediate goods, which are criti­cal inputs for many manufacturing firms as well as other critical sec­tors of the economy.

He revealed that the develop­ment will put several investments at risk with implications for job losses, poor loan access in banks and the welfare of citizens.

He said the list is prone to mul­tiple definitions and discretionary interpretations by agencies and institutions responsible for imple­mentation, adding that the HS codes of the items are not indicated by the apex bank, which could breed corruption. Bello said the al­ternative foreign exchange markets are not deep enough to meet the demand of the essential intermedi­ate products on the exclusion list, saying the exclusion of the items from the forex market is as good as import prohibition.

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