In the midst of an ever-evolving economic landscape, the Nigerian currency exchange market faces a grim reality, marked by a continuous decline in the value of the Naira. This downward spiral has raised concerns across the nation, as it not only affects businesses and the average citizen but also garners criticism from various stakeholders. This article delves into the recent depreciation of the Naira and its connection to the Manufacturers Association of Nigeria’s (MAN) strong opposition to a policy reversal by the Central Bank of Nigeria (CBN).
Naira in Freefall: A Disturbing Trend
The recent decline of the Naira paints a gloomy picture for Nigeria’s economy. According to Vanguard’s market monitor, the Naira took a significant hit, plummeting from N1,100 to USD1.0 in the parallel market within a single day. By the end of the day, it had stabilized at N1,060 in Lagos, one of the major trading hubs. This drastic depreciation has left many baffled, especially considering that it had been trading at around N1,025 in the parallel market just a month ago.
While the official Nigerian Forex Market, also known as the Investors & Exporters (I&E) window, experienced a slight recovery, with the exchange rate hovering at N790.61/$1 after a previous low of N848/$1, the rate still remains higher than the levels seen in the past weeks. Furthermore, market dealers anticipate further depreciation, adding more fuel to the economic fire.
Manufacturers Call for Policy Reversal
The economic turmoil is further exacerbated by the recent decision by the Central Bank of Nigeria to reinstate 43 items that had been previously banned from its foreign exchange window. This decision, which has stirred controversy, has sparked a sharp response from the Manufacturers Association of Nigeria (MAN).
MAN, representing various sectors of the manufacturing industry, has criticized the CBN’s decision and called for a reversal of the policy. They argue that the ban on these items is necessary to prevent a potential job crisis, increased insecurity, and the collapse of Nigeria’s economy.
MAN’s Stance on the Matter
Mr. Lekan Adewoye, the Vice Chairman of the Basic Metal, Iron, and Steel Products sector of MAN, expressed his concerns regarding the CBN’s decision on a TVC Business Programme. He emphasized the importance of supporting local manufacturers, stating, “For items that can be produced in Nigeria, such manufacturers ought to be encouraged. This directive will further harm the manufacturing industry, which is already struggling to survive.”
Adewoye pointed out a critical issue that has plagued the Nigerian manufacturing sector – policy somersaults. He highlighted the fact that some manufacturers who had made significant investments in backward integration would now regret their decisions due to the sudden policy reversal. The outcome, he fears, is that individuals with access to foreign exchange would claim to be importers, forcing genuine manufacturers out of business and exacerbating the already alarming rate of unemployment.
Adewoye continued, “Nigerian manufacturers don’t possess a significant competitive advantage over their counterparts in other developing countries. At best, they have competitive parity, meaning they’re on equal footing with other manufacturers. The meager incentives provided by the government have been further eroded by the CBN’s directive.”
The Impact of Lack of Consultation
One of the major grievances raised by Adewoye and the Manufacturers Association of Nigeria is the lack of consultation with key stakeholders in the decision-making process. This lack of engagement with the industry players has been a recurring issue in Nigeria’s policy-making landscape, leading to decisions that often fail to consider the practical implications for the country’s economy.
In conclusion, the recent devaluation of the Naira has sent shockwaves throughout Nigeria, with the parallel market witnessing a steep decline in the currency’s value. At the same time, the Central Bank of Nigeria’s decision to reinstate 43 banned items has drawn the ire of the Manufacturers Association of Nigeria, who are alarmed by the potential consequences for the nation’s economy and employment rates.
The situation raises critical questions about the stability of Nigeria’s currency and the need for coherent economic policies that take into account the concerns of key industry players. As the country grapples with these challenges, it becomes evident that a collaborative and consultative approach is essential for the sustained growth and prosperity of Nigeria’s economy.