Duro Kuteyi, the National President, Association of Food and Agro Processors (AFAP), has appealed to the Central Bank of Nigeria (CBN) to assist Small and Medium Enterprises (SMEs) to easily access foreign exchange for procurement of machinery.
According to a news report by NAN, he made this appeal while speaking at the Award and End-of-Year ceremony of Spectra Industries Ltd. in Lagos on Thursday.
While speaking at the ceremony, Kuteyi noted that having access to machines will enable SMEs to play an active role in the economy, which will help to deepen economic growth, and go a long way to improve the country’s foreign exchange earnings, job creation, and productivity.
Kuteyi, who doubles as the Chief Executive Officer of Spectra Industries Ltd, revealed that SMEs face major regulatory challenges, especially when they want to convert funds to dollars at the CBN official exchange rate to import the machines.
He said this issue is a major hindrance to one of the AFAP’s mandate, which includes advocating for an opportunity to increase food processing for local and export markets to ensure food security for the nation.
In his words, he disclosed that some members of the association had secured funding under CBN’s financial intervention.
“Most machines required for production are not available in Nigeria, and purchasing foreign exchange at the black market rate to buy the machines will be too costly. We know that many SMEs can export quality goods to other countries, particularly African countries, if we have durable and functional equipment to aid our production.”
Nairametrics reported on 25th August 2020, that in a circular issued by the apex bank to all authorized dealers and the general public on August 24, 2020, and signed by its Director for Trade and Exchange, Dr. O. S. Nnaji, restricted buying agents/companies or any third parties from accessing its SMIS forex window through FORM M forex purchases.
The restrictions hold means that any company in Nigeria looking to import a manufactured item from an Original Equipment Manufacturer into the country would need to go through the local agent of the Manufacturer in Nigeria, as FORM M will only be opened for the Original Equipment Manufacturer directly and not the local agent or any third party.
Hence the company in Nigeria seeking to purchase an item will have to pay directly to the Original Equipment Manufacturer and not through the local agent which is a third party in the transaction.
Reacting to this development, Director-General of Lagos Chambers for Commerce and Industry, Dr Muda Yusuf, during an interview said the implementation of the policy would translate to the disruption and dislocation of over 80% supply chain of the business community. Yusuf explained that SMEs and other small businesses are incapacitated to have a direct transaction with producers of machines and equipment manufacturers abroad due to their size and the small size of their purchases, the only option they have is to buy from intermediaries.
He emphasized that the policy would affect intermediaries, and the lack of intermediation would lead to supply chains disruption, and this would aggravate the impact of the pandemic on businesses and the economy as a whole, as many of these businesses would be completely cut-off.