Raise alarm over forex scarcity
By Naomi Uzor
The Chief Executive Officers of manufacturing concerns in Nigeria have called on the government to consider five percent interest rate on loans for five to seven years for manufacturers investing to scale up production.
They also called for review of existing loans with reduction in interest rate to five percent and two years moratorium.
These are contained in the first quarter (Q1’2020) MAN CEOs Confidence Index (MCCI), a quarterly report by the Manufacturers Association of Nigeria (MAN) that measures changes in macroeconomic trends, operating environment and selected diffusion factors relevant to the manufacturing sector to salvage the sector from the brinks of total collapse.
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The measures, according to the report, would improve liquidity and ramp up productivity in the manufacturing sector in a manner that would cover up for obvious losses due to COVID-19.
The CEOs also sought for 60 percent of employees’ salaries for at least three months for companies that are forced to shut down as a result of the COVID-19 pandemic to prevent laying offs of employees and massive unemployment.
“Manufacturers that are investing in order to scale up production should be granted loans at 5% interest rate for a period of 5 to 7 years. This measure will no doubt improve liquidity and ramp up productivity in the manufacturing sector in a manner that will cover up for obvious losses due to COVID-19. Prevail on the Central Bank of Nigeria (CBN) to extend its COVID-19 Stimulus packages to manufacturers not covered by existing CBN initiatives. The CBN should also grant manufacturers increased access to Foreign Exchange at pre COVID-19 rate to support the importation of raw materials, machines and spares that are not available locally. Introduce fiscal measures by waiving of import duties on Active Pharmaceutical Ingredients (APIs), other raw materials required to manufacture essential products and food related items for one-year.
“Extend timelines for filing and paying taxes (including excise duty with a proviso that it should be based on sales and not production) by 6 months after the economy returns to normalcy, Reverse the Value Added Tax Rate back to the pre 2020 Finance Act rate and reduce the Personal Income Tax to a flat rate of 10 per cent for one-year effective April 2020. This will improve the disposable income of Nigerian workers, stimulate consumption, promote an upsurge in demand and increase production output,” CEOs stated in the report.
They urged government to direct all regulatory Agencies, especially the Standards Organizations of Nigeria (SON) and the National Agency for Food and Drugs Administration & Control (NAFDAC) to reduce their respective administrative charges (Pre-COVID-19 rates) payable by manufacturing concerns by 50 percent.
Alarm over dollar scarcity
Meanwhile the manufacturers also raised alarm over scarcity of dollars following the difficulty of its members to access it at the backdrop of the COVID-19 induced crash in oil prices which cut the flow of foreign currency to Nigeria.
“It was pretty difficult to source forex from all the available windows. Members have had problems accessing foreign currencies for five weeks in part due to lack of central bank’s interventions” MAN said.
There is an estimated $1 billion backlog of unmet dollar demand, investment banking firm, FBN Quest, said last weekend.