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.