OPS sees CBN forex review reviving productive sector

The Organised Private Sector (OPS) says the Central Bank of Nigeria (CBN)’s  lifting of ban on Foreign Exchange (FX) cash deposits in banks and discontinuation of its supplies to Bureau De Change (BDC) operators have the capacity to revive the struggling productive sector of the economy, as it could make more funds available for the real sector.

The OPS, comprising maritime operators, manufacturers and small and medium enterprises however, urge CBN to extend the policy decision to the 41 items earlier banned from the market to enable Nigerian manufacturers to source forex from autonomous markets with which to fund their factories.

“However, the lack of comment on telegraphic transfers, FX cash notes, and the two way quote market, could further limit the positive impact introduced by the regulatory change on the market, requiring another regulatory change by the CBN to correct imbalances,” say Ecobank analysts in their market report, Tuesday.

Frank Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN), sees particularly the discontinuation of FX supplies to Bureau De Change as a positive step for real sector players.

“We are happy about the review, particularly in the area of not funding the BDCs,” Jacobs told BusinessDay last night.

“But we are also saying that the fund should be made available for funding raw materials for manufacturers,” he said.

He pointed out that the CBN’s information in the area of domiciliary account is still scanty as it only deals with deposits, rather than whether depositors can use the fund for transfers and business.

CBN’s decision is sequel to agitations by the private sector and analysts for the ease of monetary policy to enable businesses stay afloat.

Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), said the CBN’s revised policy would gradually ease private sector woes if businessmen are allowed to do business with the deposits in the domiciliary account.

“I think if they will allow us to do business, it will ease the pressure because inflows will improve,” Yusuf said.

Jonathan Nicole, president, Shippers’ Association of Lagos State, told our correspondent in a telephone interview that the new policy is a step in the right direction towards lifting the challenges Nigerian shippers are going through in recent time.

“This is how it is supposed to be. It means that any importer or exporter, who needs foreign exchange for business, can go to the commercial bank because Bureau De Change has not been able to help the business of shippers,” Nicole said.

According to him, shippers expect the federal government to go a step further to make access to foreign exchange for genuine importers a lot easier because without foreign exchange the system will collapse. “Now the terrain will be clear that people should go to bank and there is hope for the genuine importers and we believe that banks will not refuse such people’s foreign exchange request.”

Nicole believed that with this first step, that before the end of the first quarter of the year, that businesses will begin to pick up and a lot of people will be able to bring in their cargo.

“The government has been approached by shippers and manufacturers concerning the 41 selected items that were banned from accessing foreign exchange from the official market, some of which are critical inputs for manufacturers. It is now left for the government to review the policy and we believe that they are going to do that otherwise, industries will suffer.”

Tony Anakebe, maritime analyst, said importers needs to know their stand in the new forex rule, adding that CBN needs to, not only allow deposit into domiciliary account but also give room for people to transfer currency from their account to their suppliers.

Meanwhile Deposit Money Banks (DMBs) yesterday lifted the restriction placed on cash dollar deposit into domiciliary accounts by customers, following the new foreign exchange rule by CBN.

One of the banks stated: “We are pleased to inform you that you can now make Foreign Currency Cash deposits into your ….. domiciliary account(s) at any of our branches from Tuesday, 12thof January, 2016. Our resumption of this service is in response to the Central Bank of Nigeria’s (CBN) directive, issued on the 11th of January, 2016, authorising Commercial Banks in Nigeria to resume acceptance of foreign currency cash deposits”.

But the BDC segment of the foreign exchange market were mired in confusion following the new policy as the association body has been having series of meetings, engaging with the CBN and other stakeholders on the way out.

Aminu Gwadabe, acting president, Association of Bureau De Change Operators of Nigeria (ABCON), noted that each BDC has lost about $55,000 year-to-date as a result of foreign exchange pressures.

He was concerned that each of 3,000 BDCs pays as much as N35 million as caution deposit to the CBN, adding that the meeting would continue today after which they would come up with a position on the new development.

ODINAKA ANUDU, HOPE MOSES-ASHIKE, AMAKA ANAGOR-EWUZIE