MAN, LCCI kick against Sanusi’s call for naira de­val­u­a­tion

Daily Trust - - BUSINESS - From Sun­day Michael Ogwu & Kay­ode Ogun­wale, La­gos

In­dus­tri­al­ists have kicked against the Emir of Kano Muham­madu Sanusi II’s call for Cen­tral Bank of Nige­ria (CBN) to fur­ther de­val­u­ate naira.

Speak­ing to Daily Trust on tele­phone chart, Pres­i­dent ,Man­u­fac­tur­ing As­so­ci­a­tion of Nige­ria (MAN), Dr. Frank Ja­cobs said fur­ther de­val­u­a­tion of naira is a threat to Nige­rian econ­omy.

Ac­cord­ing to him, man­u­fac­tur­ers are find­ing it dif­fi­cult to cope with CBN de­ci­sion on for­eign ex­change ban on 41 items.

“CBN has done it be­fore and there is noth­ing to show for it, even if it de­val­u­ates it by N1,000 to $1 the sit­u­a­tion will not change. It will af­fect for­eign di­rect in­vest­ment into the coun­try if we de­val­u­ate fur­ther.”

Ja­cobs noted that fur­ther de­val­u­a­tion of naira would lead to mas­sive lay­off by man­u­fac­tur­ers be­cause Nige­ria busi­ness re­lies on dol­lar, say­ing “we are not ex­port coun­try, even the prod­ucts we are pro­duc­ing lo­cally we will still need to source for raw ma­te­ri­als from abroad”, he said.

In his own the Di­rec­tor Gen­eral of La­gos Cham­ber of Com­merce and In­dus­try (LCCI), Mr. Muda Yusuf ,CBN’s ap­proach to the man­age­ment of the for­eign ex­change mar­ket has cre­ated more prob­lems for the econ­omy than it has solved.

“It has re­sulted in trans­parency is­sues in for­eign ex­change al­lo­ca­tion; round trip­ping be­cause of the huge dis­par­ity in rates; liq­uid­ity prob­lem as it is very dif­fi­cult to ac­cess for­eign ex­change even for items that are valid for for­eign ex­change.

He fur­ther said that the ab­sence of level play­ing field and un­cer­tainty as the for­eign ex­change mar­ket has be­come very un­pre­dictable. The ef­fects of all these have been ad­verse and pro­found on busi­ness”, he said.

Yusuf af­firmed that the CBN has fixed an ex­change rate which it lacks the ca­pac­ity to sup­port in terms of sup­ply.

Ac­cord­ing to him, “Its poli­cies also rep­re­sent a ma­jor ob­struc­tion to in­flow of au­ton­o­mous for­eign ex­change. It is a very un­usual model. The CBN got it­self need­lessly en­tan­gled in a com­plex web of trade pol­icy is­sues which have caused vary­ing de­grees of dis­lo­ca­tions for in­vestors in the econ­omy.”

He urged CBN to re­turn to sta­tus quo and fo­cus on the creation of a for­eign ex­change mar­ket that is ef­fi­cient, trans­par­ent, pre­dictable and mar­ket driven.

The apex bank should there­after col­lab­o­rate with other eco­nomic min­istries like fi­nance, trade and in­vest­ment, plan­ning com­mis­sion and the Nige­rian Cus­toms Ser­vice to ar­tic­u­late fis­cal pol­icy mea­sures to fix sec­toral, pro­duc­tiv­ity and com­pet­i­tive­ness is­sues in the econ­omy, he said.

Also com­ment­ing on the state­ment, a fi­nan­cial an­a­lyst and Man­ag­ing Part­ner, Catog Con­sult­ing, Mr. Matthew Oga­gav­wo­ria said there is no ba­sis for CBN to de­val­u­ate naira.

He said if the de­ci­sion of former CBN gov­er­nor is ap­plied, com­pa­nies’ ca­pac­ity to pro­duce would shrink.

Any at­tempt to de­val­u­ate naira will worsen Nige­ria econ­omy, say­ing cost of leav­ing will be high.

Emir of Kano, Muham­madu Sanusi II

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