Forex restriction: Foreign suppliers shut credit lines to Nigerian businesses

The organised private sector weekend said that members are finding it difficult to pay foreign creditors for goods imported before the CBN restriction on 41 items access to foreign exchange market in Nigeria. They also said that many hotels in the country are saddled with large amounts of cash, foreign currency which they could not lodge into their domiciliary accounts or do business with.

According to a survey report of members of Lagos Chamber of Commerce and Industry (LCCI) and other operators in the private sector, there is growing inability of Nigerian businesses to pay foreign creditors on account of items imported prior to the CBN policy. It also said that some manufacturers are unable to manufacture due to lack of foreign exchange to import raw materials.

According to the survey, there is now delay in the processing of Form ‘M’ to import and meet demands, leading to loss of market share and slower consumer demand and lower profits.

The operators claimed that Form M opened for items on the list prior to the CBN policy are not processed for payment leading to credit defaults with foreign suppliers.

They equally said that vegetables and processed vegetable products used by Quick Service Restaurants are included in the list and this has affected negatively the availability of forex to import these materials.

A respondent to the survey report said, “Export proceeds have become idle while in need of forex to import through other banks. Companies in the Fast Moving Consumer Goods sector are unable to settle outstanding obligations to foreign suppliers which has slowed down their ability to get fresh supplies for production.”

The report further stated that export business is hugely affected as they are unable to sponsor and pay marketing activities outside the country and that they are also experiencing payment delays.

The survey also said that there are now “delays in sourcing forex to import spare parts to meet breakdown of production machinery, stating that spare parts that were picked off the shelves before will now need to undergo series of processing before forex is made available to import them.

It would be recalled that the CBN on Tuesday 23rd June 2015 officially stopped the sale of dollars for a list of 41 items, in its quest to reduce the pressure on the Naira as well as preserve the country’s external reserves. The items include rice, cement, margarine, palm kernel/palm oil products/vegetable oil, meat and processed meat products, vegetable and processed vegetable products, poultry –chicken, eggs, turkey – private airplanes/jet, Indian Incense, tinned fish in sauce – Geisha/Sardines, cold roiled steel sheet and galvanised steel sheets.

Others are roofing sheets, wheel barrows, head pans, metal boxes and containers, enamelware, steel drums, steel pipes, wires, rods, wire mesh, steel nails, security and razor wire, wood particles boards and panels, wood fiber board and panels, plywood boards and wooden doors.

In addition, sourcing of forex for the importation of toothpicks, glass and glassware, kitchen utensils, tables, textiles, woven fabrics, clothes, plastic and rubber products, soap and cosmetic, tomatoes/tomato paste and Eurobond/foreign currency bond/share purchase was prohibited.

The apex bank’s restriction was communicated via a circular signed by its Director, Trade and Exchange Department, Olakanmi Gbadamosi.

But maritime industry operators and members of the organised private sector have said that policy is hurting the businesses of several industries and has not served the purpose of strengthening the Naira. 

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