Current Exchange Rate Hits Manufacturing Industries Hard

Organisations in the manufacturing sector of the economy that source foreign exchange to import raw materials and products have been hit hard by the devaluation of the naira and the suspension of Retail Dutch Auction System (RDAS) by the Central Bank of Nigeria (CBN).

Naira-dollar-at the interbank foreign exchange market, the exchange rate of the naira to a dollar is N196.9 while in the black market it hovers between N210 to N214 to a dollar. Similarly, British Pound Sterling exchanges between N303 to N304 to the Naira, while thed Euro exchanges for N222.

Investigations by Financial Vanguard, showed that the high exchange rate occasioned by the suspension of RDAS policy, has wiped smiles off the faces of operators in the sector since it was implemented by the apex bank in February to tighten control on the foreign exchange market, in a bid to protect the nation’s external reserves and save the Naira from further slide in value.

Dr. Frank Udemba Jacobs, President of Manufacturers Association of Nigeria, MAN, noted that the impact is enormous on all manufacturers, especially those that depend on imported raw materials. According to him, the Federal Government’s plan to create three million jobs annually will be a mirage if the current exchange rate is not addressed quickly.

He urged Federal Government through the CBN to create a special foreign exchange window for manufacturers. In addition, he requested the CBN to examine manufacturers’ forex demand trends to ascertain the actual need of each company for the importation of machines, spare parts and raw materials. He assured that MAN will validate beneficiaries to ensure that only bonafide manufacturers have access to such special foreign exchange window.

Also, Mr. Okey Akpa, the Chairman, Executive Committee of Pharmaceutical Manufacturers Group of MAN, disclosed   that the negative effects of the CBN policy of RDAS have  started to trickle down to the entire pharmaceutical industry. He said companies operating in the sector are spending so much on importation of pharmaceutical glass bottles and packaging materials that are not available locally.