The Group Managing Director of Vitafoam Plc, Taiwo Adeniyi, has called on the government to create a special forex window to help manufacturing sector operators access foreign exchange.
Adeniyi, who stated this in a chat with Nairametrics, described forex shortages as one of the major impediments to the growth of the manufacturing sector in Nigeria.
He noted that the establishment of a special window by the authorities would make forex accessible to genuine manufacturers and further give a boost to the sector’s contribution to the nation’s GDP.
Impact of forex shortages: Adeniyi stated that the shortage of forex to source for raw materials has continued to impact negatively on the cost of operations of quoted companies in the real sector of the economy, hence leading to a high cost of operations and a drop in earnings.
He noted that there is a need for the government to urgently address the plight of manufacturers, especially in the areas of forex instability to boost expansion and create more jobs in the country. He said:
- “Top on the list of what we are asking the government to attend to is the dichotomy between the various forex windows that we have been expecting them to bring in economists to be able to look into the impact of the various decisions as regards forex on the economy.
- “BOI gives loans to manufacturers, they will make a list of their forex requirements to the CBN and the apex bank will grant it to genuine manufacturers because they know them. Government should create a special window where genuine manufacturers can access forex. You know them; you can appraise them, and we pay taxes.
- “Government has everything they can use to measure performance, they have done all manners of disapproval and delisting, yet it is not working. Those items on the exclusive window get to this environment even cheaper than those of us because the windows we get forex make a mess of it.”
Raw materials: Adeniyi noted that local sourcing of raw materials remains one of the solutions to forex unavailability, adding that in the absence of local production capacity, importation of foreign raw materials became inevitable.
Other industry challenges: Adeniji stated that apart from challenges, insecurity, high energy cost and a dearth of infrastructure are other disincentives to investment in Nigeria.
- “If you do a combination of these factors, you will find out that if you cast your mind back at what has helped the nation to be where it is currently, these elements form the major part,” he said.
He stressed the need for the government to encourage private sector involvement in infrastructure by initiating favourable policies that would help to create more jobs and close the infrastructure gaps.
