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Pharmaceutical industry urges CBN to review moratorium to compensate for FX delays

CBN boosts production, trade with $288m retail SMIS

Nigeria’s pharmaceutical industry, comprising of 101 registered members with an investment worth N300 billion on Tuesday urged the Central Bank of Nigeria (CBN) to review the moratorium or reduce the interest rate for the N100 billion healthcare intervention fund, to compensate for the delay in getting foreign exchange (FX).

In its communique on 25th March, the CBN announced the setting up of a N100 billion credit support fund targeted at the healthcare sector. The fund would provide working capital loans as well as term loans to healthcare players to support expansion activities, research, and similar activities.

The loans would come at interest rates of 5% p.a. till 28th February 2021 and climb to 9% p.a. for the rest of the loan duration.
Mazi Sam Ohuabunwa, president, Pharmaceutical Society of Nigeria said the major challenge of the industry availability of foreign exchange. He was optimistic that risks associated with the industry would reduce if the CBN becomes compassionate in reducing interest rates or review the moratorium on the fund.

Already, 15 operators have so far accessed the fund and 15 applications are waiting for approval of the Apex bank.
Ohuabunwa explained that the industry is having difficulties in converting the money to purchase machinery and equipment because of foreign exchange problems.

He spoke on ‘Nigeria’s Manufacturing Sector and CBN N100bn healthcare intervention fund: opportunities, challenges and post Covid-19 expectations’, at a Webinar organized by the Finance Correspondents Association of Nigeria (FICAN) in Lagos.

Mazi said the duo of rising inflation and high level of depreciation of Naira are major threats to proper utilization of the fund and ability to generate money to pay back.

Also speaking, Fidelis Ayebae, Chairman, pharmaceutical sector of the Manufacturers Association of Nigeria (MAN) corroborated with Ohuabunwa to say non-availability of FX is a major challenge confronting the industry.

Ayebae raised concerns over policy somersault, saying the FX policy on the third party will not work in this country as it is hampering the activities of the sector.

The CBN on August 24, 2020, directed all authorised dealers to desist from the opening of Forms M whose payment is routed through a buying company/agent or any other third parties.

“Products of the manufacturing industry will continue to drop if that policy is not amended. We inflict pain and death on industries that are not even sufficient,” Ayebae said.

He warned that if that policy continues till the end of the year, it would affect the industry to the point of laying off workers.
Another policy somersault he mentioned was on Value Added Tax (VAT). He called for a de-emphasis on tax, levies, and other fees for the industry.

He called on the CBN to create a specialized bank like the manufacturing finance bank, an infrastructure bank, derivative agriculture bank among others that would cater to the financial needs of the industries.

He said there is no way the industries can be profitable when they access commercial loans at between 25 and 30 interest rates.