… To this end, we call on the Central Bank of Nigeria to direct the concerned commercial banks to immediately unfreeze the accounts of innocent manufacturers about the vexed issue of forex forwards.
The Manufacturers Association of Nigeria has said that the unresolved $2.4 billion foreign exchange (FX) forward contract backlog by the Central Bank of Nigeria, has put local manufacturers in trouble with the commercial banks.
Segun Ajayi-Kadir, the Director- General of MAN, who disclosed this on Thursday in Lagos, told journalists that this development has led to the harassment and the freezing of some of its members corporate and personal bank accounts by some commercial banks in the country.
Industrial Times recalls that the $2.4 billion backlog was part of a larger $7 billion outstanding obligation.
Last year , despite the interventions of the former Minister of Industry, Trade and Investment, Dr Doris Uzoka, the CBN’s failure to fulfill these forward contracts, which are intended to mitigate currency risks, is causing financial distress for manufacturers.
Said Ajayi-Kadir : “Recently, our members have reported significant unwarranted complexities and undue highhandedness by the banks.
Many have faced stringent requirements that are not aligned with the Central Bank of Nigeria’s (CBN) guidelines, resulting in unnecessary bottlenecks and illegal freezing of their corporate and personal bank accounts, with a negative impact on production, which could threaten the sustainability of manufacturing operations.
A worrisome case in point is the ongoing forex forward-related dispute involving KAM Industries Nigeria Limited, a leading manufacturer in the steel sector in West Africa a member of the Association, and one of the commercial banks in Nigeria. “
He emphasized that as a vital sector of the economy, manufacturers rely heavily on access to Forex for the importation of essential raw materials, machinery, and equipment that are not locally available.
However, recent developments have shown a troubling trend in the way banks are handling the matter, to the extreme detriment of manufacturing industries have the needless misfortune of being at the receiving end of a problem they didn’t create and shouldn’t suffer.
This rather unfortunate treatment of private business is only the reported one, and several others are undergoing similar harrowing experiences.
This should stop in the interest of economic development of Nigeria, job security and business sustainability.
It is therefore pertinent for us, as the umbrella body for manufacturers, to clarify the position of our members concerning the subject matter involving commercial banks and the Central Bank of Nigeria.
As it is the norm, commercial banks receive payments in Naira either through direct remittance from their customers or credit facility to secure FX for raw-material importation.
Upon receipt of these funds or grant of credit facility, the banks then remit the Naira to the Central Bank on behalf of their customers.
From that point, the funds are deemed to be held by the apex bank, thereby completing the customers’ obligations.
Given this background, MAN asserts that its members are not liable for delays or complications arising after the remittance of funds to the CBN by commercial banks.
Our members have played their part and the commercial banks should play their part. Our members should not be harassed by the banks. The banks should show understanding and be supportive as we all seek a solution to this rather unfortunate and unexpected … to this end, we call on the Central Bank of Nigeria to direct the concerned commercial banks to immediately unfreeze the accounts of innocent manufacturers about the vexed issue of forex forwards.
Commercial banks and manufacturers should be partners that collaborate to build shared prosperity for the nation, not adversaries.”
