Manufacturers lament over forex scarcity, say sector negatively impacted

Nigerian manufacturers and businessmen have again lamented  over the scarcity of forex which is hampering their ability to import raw materials, equipment, spare parties and other input.

Muda Lawal, director-general, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, who dropped the hint, said the development has created a new dimension to the supply chain problems, which many manufacturers had suffered from during the peak of the lockdown.

Yusuf said the forex crisis had put enormous pressure on the parallel market, resulting in a sharp depreciation in the exchange rate in that segment of the market.

“Across practically all sectors, we are experiencing cost escalation, loss of credit lines enjoyed from foreign creditors, forex remittance challenges and many more.  We need an urgent response from the CBN to calm the situation and restore confidence in our foreign exchange management framework,” he said.

According to the LCCI D-G, the dollar shortage is hitting most of its 2,000 members hard.

“If the situation persists, it will lead to lay-offs. If you are not producing, there will be a shortage of goods in the market, prices will go up,” he said.

Also, foreign banks are holding back dollar credit lines for banks as dollar scarcity in the economy worsens.

Many of the correspondent banks are capitalising on the projected 8.9 per cent shrink in domestic economy this year and continued drop in the country’s dollar earnings to take extra caution in providing dollar credit lines for local banks to avoid loss of the funds.

With the oil market depressed by a producer price war and the Covid-19 pandemic-induced global recession, the nation’s foreign reserves have fallen 20 per cent in the past year to $36.1 billion, around five months of import cover.

There have also been two devaluations of the naira’s official rate this year, with the local currency exchanging at over N470 per dollar at the parallel market.