…Review CBN’s forex allocation policy
Barely one year after Muhammadu Buhari, was sworn-in as Executive President of the Federal Republic of Nigeria, Nigerians and the international community continued to assess his ongoing war against corruption with mixed feelings amidst economic hardship. This is even as stakeholders in the maritime sector urge him to revive the nation’s ailing economy and halt further drop in ports’ revenue earnings. STAN OKENWA, Senior Correspondent, reports.
Few days from now, the present administration under President Muhammadu Buhari, will clock one calendar year in office, having been inaugurated on May 29, 2015, after the general elections.
During the campaign for the 2015 elections, the ruling party, the All Progressive Congress (APC), anchored its manifestoes on three key points namely; fight against corruption, revamping the economy and job creation within the four years in office.
Whereas a larger percentage of the citizenry can agree that the administration had sustained its war against corruption since inception considering series of arrests and quantum of anti-graft related cases in several courts of the land, the economy is yet to be revived due to controversial policies and attendant poor results after all.
Besides, the appointment of former Governor of Rivers State, Hon. Rotimi Amaechi, as the Minister of Transportation, was not only greeted with mixed feeling by the stakeholders but a hard nut to crack due to what they described as his weak background of the industry.
In the maritime sector, preliminary policy decisions of the present administration have been adjudged by some stakeholders as negative and ill-timed, though they were designed to revitalise the economy.
For example, the Central Bank of Nigeria’s (CBN’s) policy, restricting foreign exchange (forex) allocation to import of 41 items that could locally manufactured, have been erroneously described as a danger to the economy on one hand, and the cause of serious drop in the targeted revenue earnings of the Nigerian Customs Service (NCS), for the fiscal year 2016.
The apex bank had claimed that it placed forex restrictions on the 41 items to boost domestic production and shore up the value of naira, but the leadership of the Manufacturers’ Association of Nigeria (MAN) challenged the argument, claiming, that majority of the 41 items were made up of strategic manufacturing components that could not be produced locally for now.
In a chat with Daily Champion in Lagos, the Director-General of Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, pleaded with the CBN to review its forex policy to save manufacturers whose activities are reliant on some of the delisted foreign materials.
He emphasized that time has come for the apex bank to protect exporters whom the policy now prevents from having access to their export proceeds.
While hailing the CBN for stopping the sale of forex to Bureau de Change operators, he expressed concern that the apex bank was silent on the two critical issues. He however, insisted that the restriction of the items should not only be immediately reviewed immediately but their transactions possibly be restricted to the autonomous foreign exchange market.
Yusuf also expressed concern over the CBN’s silence on access to export proceeds by exporters, arguing that exporters should be given ample flexibility and freedom in the use of their export proceeds. According to him, they should not be deprived of the benefits of prevailing currency market conditions that could give a significant boost to non-oil exports.
The CBN had in February 2015, directed to all exporters to pay their export proceeds into the domiciliary accounts of their respective commercial banks.
Some analysts are however worried over the monumental loss of revenue by exporters as the current policy compels exporters to sell their dollars to the CBN at the official exchange rate of N199/dollar instead of the parallel market rate of N350. This is hurting the non-oil export sector and discouraging exporters from investing in the sector.
Currently, many factories whose input mix includes some of the listed items are at the verge of massive reduction of workforce or shut down due to stoppage of manufacturing activities following the CBN forex policy. Worse hit include the local manufacturers of Tomato paste which also locally produced.
Recent report indicated that Nigeria’s non-oil export earnings have come down by more than $5.9 billion from $10.35 billion recorded in 2014 to $4.39 billion in 2015.
Besides, credit to non-oil exports sector, which currently is in the decline, constituted only a paltry 0.6 per cent of total domestic credit to the private sector in the past five years.
The Governor of the Central Bank of Nigeria, Godwin Emefiele, who made the disclosure at a recent non-oil exports stimulation conference organised by CBN and the Nigerian Export-Import Bank (NEXIM) in Abuja, said the apex bank provided N300 billion as export stimulation intervention fund to exporters at about nine per cent.
According to him, the volatility in the international oil market has necessitated the renewed focus on non-oil exports as panacea to the nation’s dwindling foreign reserves.
Only recently, the Nigerian Export Promotion Council (NEPC) raised the alarm, saying, Nigeria’s total non-oil export volume in the first three-quarters of 2015 was USD612.73 million, an indication of steady drop from the figure of 2014.
The Executive Director of the federal agency, Olusegun Awolowo, made the disclosure in a statement, stressing that the trend is not good for the economy which is in need of rise in the sub sector considering the crashing of global oil prices.
“This can be attributed largely to two major reasons, which are – 2015 being an election year, there were plenty of uncertainties surrounding political activities and that of the insurgents in the northeast. “However, some marginal impact was made though only statistics of the first three-quarters are captured for now.
“For the first quarter, we have gross weight of 516, 428. 63 metric tones, with export value of 664,638. 89dollars.”
“The second quarter has gross weight of 368, 529. 64 metric tonnes with export value of 391, 602,161. 02, while for third quarter we have gross weight of 311, 769. 10 metric tonnes with export value of 220, 460, 728 dollars, respectively.
Within the one year of the present administration, findings by our correspondent indicated that earnings by the NCS have dropped to a 10 year low due to forex crisis which lead to massive drop in importation without a corresponding rise in local production owing to poor local production capacity.
It would recalls that few days after the Comptroller-General of Customs, Hameed Ali, was named as the new head of the federal agency, he set N1trillion as revenue target for NCS in 2016.
But in response, key stakeholders in the nation’s shipping, import and export business immediately picked holes in the target, saying, the new target might not be realized considering the serious drop in importation business, new forex policy and restrictions and low manufacturing capacity of the economy.
The founder of National Association of Government Approved Freight Forwarders’ (NAGAFF), Dr. Boniface Aniebonam, said anybody is free to set targets but what is important is hitting the set target at the end of the day.
He decried the current lack of synergy between the Service and association of agents who he said will bring the money and not just the Customs officers at the ports in the first instance.
Already, the president of Association of Nigeria Licensed Customs Agents (ANLCA), Prince Olayiwola Shittu, in an interview expressed reservations on the cat and dog relationship between the Col. Hameed Ali, lead Customs and all the agents, saying, targets may work better if there is credible working relationship between Customs and agents.
In another interview, public affairs analyst and finance commentator, Dr. Ken Igboanugo, said achieving N1trillion target by the Customs this year can be possible if “The right policies are put in place”.
According to him, “First of all, the local manufacturing capacity need to be raised and this can only be done by providing enabling environment for manufacturing including seamless access to forex and credit at single digit which is not happening now”
“Again, the nation’s roads and other critical infrastructure base must be put in place and these things cannot come so easy especially for a government that is just coming and facing tough time in seeing fund to work.
But the Customs CG seems highly expectant that his current drive against corruption will help him hit the record target after all.
As part of his drive to halt corruption in the Service, he has redeployed several top officers and recently began the review of all promotions in Customs as part of moves to tame infractions.
However, the key challenge of the present administration was the passage of the N6.08 trillion 2016 budget, earlier met with controversies that forestalled its assent until Friday, May 6, 2016.
Even though the budget had been passed, release of allocation did not follow suit as investigations suggest that one week after, no Ministry Department and Agencies (MDA’) has received any fund from the budget. This may have been the reason the leaked N13.1m loan request document by the Minister of Information and Culture, Alhaji Lai Mohammed, to National Broadcasting Commission (NBC) dated May 11, 2016 was a great surprise to Nigerians on the sincerity of the administration, considering the fact the Minister remains a key campaigner of anti-corruption.
However, there have been ups and downs at several agencies of the government in the maritime sector.
For instance, within the period under review, the former Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Pat Akpobolokemi, was not only ousted, but handed over to the Economic and Financial Crimes Commission (EFCC) for prosecution in the law court. The case is yet to be concluded..
Only last month, the loser in the Rivers State guber polls, Dr. Dakuku Peterside, was named by President Buhari as the DG of NIMASA and since then, he has began a serious reforms in the agency, building bridges with relevant international and local agencies.
Also, the Nigerian Ports Authority (NPA) has been able to drive the policy of standardization of trucks operating within and around the ports to limit cases of accidents and rickety articulated vehicles along the ports access roads.
Only recently, the age long rivalry between the Nigeria Inland Waterways (NIWA) and Lagos Waterway Transport Agency has been put to rest as both agencies now work in harmony for the good of water transportation.
But still, not much has been done on the poor state of port access roads within Apapa and environ. The sorry state of the situation has forced several companies hitherto operating in the area and even some residents to relocate, thus turning the formerly busy and bobbling areas to abandoned region of Lagos.