We are strictly against naira devaluation –VEOPAN

 

Vegetable and Edible Oil Producers Association of Nigeria (VEOPAN), a major player in the Nigerian made consumer products sector, has lent its weight behind the Federal Government’s unwavering stand against devaluation of the naira, saying if devalued, it will drive more VEOPAN and domestic companies under.

Already, the body revealed that 50 percent of its over 200 active members have closed shop due to the current economic headwinds.

The Muhammadu Buhari administration has come under intense pressure from calls by the World Bank, the International Monetary Fund (IMF), few other international financial institutions and some analysts, to devalue the naira. The currency officially exchanges at N199/$, while it has hovers at the parallel market, going for between N250 and N350/$.

But Okey Ikoro, VEOPAN’s national president and chairman/CEO of Camela Vegetable Oil Company, told BusinessDay exclusively in Owerri, Imo State, last week that devaluing the naira would do more harm than good to the already ailing economy.

Ikoro said the productive sector of the economy would be severely battered at the naira devaluation, saying VEOPAN had more than 200 registered member companies, but the continued economic headwinds had caused it to lose over 50 percent of its member companies.

“As at now, those of our companies who are struggling to survive are operating at about 30 percent of their installed capacity, due to many factors,” the VEOPAN national president said.

He said the “crude palm oil (CPO), which is our major raw material, which we import to make up for the domestic supply shortfall, has been placed on the list of 41 import prohibition items by Federal Government, which has further affected our business.”

He therefore said: “We are strictly against the devaluation of the naira for very good reasons. Instead of devaluation of the currency, the Federal Government should remove every luxury item from importation. Anybody who wants to bring them into the country can go to the parallel market and bring them; even if $1 is N1,000.”

He stated that although the Federal Government through the Central Bank of Nigeria (CBN) tried to create an agricultural intervention fund, but he said this had been saddled with a lot of bottlenecks, which made it difficult for VEOPAN members and many other agro-based companies to access.

“This was due to the fact that the CBN, which created the agric intervention fund, at the same time threw it back to the commercial banks, giving them almost 100 percent risk, which was difficult for manufacturers to access,” he said.

According to Okoro, Nigeria is a country that is still trying to build its infrastructure and develop the industrial sector, as a result, “devaluation does not add any value to the economy now because most industrialists and manufacturers still import their plants and equipment; and all these require using foreign currency, especially the US dollar.”

Besides, he said the power sector of the economy was still heavily under-performing, causing most manufacturers to resort to importation of generators to power their companies. All these are procured with foreign currency, he said.

He went to say that “devaluation would have been good if Nigeria has things to export; in that case, everybody will be excited because if, I export something for $1,000 it means there will be a lot of money for the exporter.

“It will create a very good incentive for the people to start exporting, because there will be a lot money to be made, but you cannot do it now when you do not have anything to export, you will cripple yourself.”

Ikoro therefore, disagreed with the calls from some prominent Nigerians suggesting to the Federal Government to devalue the currency.

“I disagree with them; I am talking as an industrialist, and as a practical person who has been into industry for over 20 years. We cannot devalue where there are no gains,” Ikoro said.

 

Meanwhile, he has advised that Federal Government to thoroughly examine any policy it would make, ensuring that such policies are good and sustainable for an economic growth of the country.

“The issue of making a policy today and after one month it is changed does not give encouragement to investment,” the industrialist said.

He stated that economic policy ensure that people will start to build on it; but lamented that if halfway, the policy is changed, people who have invested will loose their investments. Such would act as disincentive to the industrialists, he said.