Manufacturers kick against CBN forex policy on third party agents

The Manufacturers Association of Nigeria (MAN) has kicked against the prohibition of third-party agents for foreign exchange applications by the Central Bank of Nigeria (CBN) saying the policy will affect the process that made it easier for Small and Medium Enterprises (SMEs) to get forex.

BusinessLive had reported that the CBN, in a circular, had ordered banks not to transact with third party requesting for forex going forward as the apex bank has chosen to transact directly with companies in need of forex and not agents acting on the companies behalf saying this will prevent double-handling and ensure proper utilisation of the forex.

However, the President of MAN, Mansur Ahmed, said the policy will have a negative impact on SMEs who deal with accredited agents as many Original Equipment Manufacturers abroad don’t sell to individual buyers directly – Ahmed said this helps to lower prices during procurement.

According to a statement from Ahmed, “Given the prevailing extremely stressful operating environment our fragile manufacturing sector is contending with, the implementation of this new directive is like hammering the last nail on the coffin of many of our ailing members.”

MAN added that “In Nigeria, central procurement plays a critical role in the production process, an absence of same will hamper manufacturers operating in the country and may result in factory shutdowns.

“In the absence of a global procurement agency, most companies would not have access to the final suppliers, who consider the inherent country risks a disincentive for trading directly with companies in Nigeria.”

MAN advised that the CBN should adopt a phased approach in eliminating the third party process rather than an outright elimination. It was gathered that the agents usually offer credit during foreign exchange scarcity, hence their importance to small and medium manufacturers.