CBN yet to settle $2.4bn FX forward contract, says MAN DG

Segun Ajayi-Kadir, the director general of Manufacturers Association of Nigeria (MAN) has said the continued failure of the Central Bank of Nigeria to address the $2.4 billion forex contract is piling pressure on industries, causing them to declare huge losses.

Speaking at the 2024 Access Corporate Forum on Thursday, with the theme, “Nigeria’s Economic Rebirth: Hopes and Implications”, Ajayi-Kadir said many of the losses recorded by manufacturers are linked to the unredeemed FX forward contracts.

“There is still the issue of the unsettled $2.4 billion FX Forwards contract that the CBN, for inexplicable reasons, is still holding.

“Most of our big industries are declaring losses and some of these losses are traceable to this issue of not honouring FX Forwards contracts,” the MAN DG said.

Ajayi-Kadir further pointed out that successive governments in the country had declared their intention to grow domestic production, but failed to show adequate interest in the growth of the manufacturing sector.

He lamented that the manufacturing sector in Nigeria has continued to perform at less than 50 percent of its installed capacity.

“There is always intention to grow the sector, but at the end of the day, it is either a lack of total commitment to put policy into action or that the sector is crowded out in terms of priorities,” he said.

Finance Minister Wale Edun, reacting to the controversy trailing the refusal of the CBN to honour its FX forward contract obligations to manufacturers, advised the leadership of MAN and Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) to keep dialoguing with the apex bank for smooth resolution of the matter.

He assured that the government was providing support and relief to manufacturers through fiscal measures, and disclosed that the economic management team would be reconvened soon, as the government was preparing a document that would put together its economic plan.

According to him, the government aims to reduce the number of taxes businesses are paying to a single digit.

Edun stated, “The rationale is this: 90 per cent or so of the tax revenues that arrive in the government coffers comes from less than 10 taxes.

“There is ongoing work to bring down the rate of corporate income tax as we are trying to encourage investments in order to grow the economy.

“There will be exemption from VAT for foods, pharmaceuticals, and health products, whereas taxes on luxury items will be adjusted upwards,” he stated.