The economic woes of Nigeria have worsened with foreign exchange needed for importation of raw materials for industries is beyond the reach of importers.
The scarcity of foreign exchange from the official window has compelled some manufacturers to source funds from the black market in order to keep their business going.
The implication of this is that the value of the naira is expected to fall drastically over the excessive rate of demand over the availability of forex.
In the coming months, affected manufacturing firms say consumers may have to pay about 100 per cent more than what they currently pay for locally manufactured products. Some manufacturers say they have been on queue to access forex for a period ranging from six months to one year without making any progress.
“While you wait endlessly like this, your production suffers and you do not have products to sell to your customers,” the Managing Director of Mojec Metering, Chantel Abdul, said.
When In June, the Central Bank of Nigeria dropped its fixed exchange rate strategy and adopted a flexible exchange rate, the move was seen as one that would bring enough supply of forex.
Although the new official rate was put at N280, the President, Manufacturers Association of Nigeria, Dr. Frank Jacobs, agreed that though it was high but that there should be more dollars in circulation than in the previous months.
The Director General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, said of the policy, “The Chamber believes that this policy choice offers an improvement in the efficiency of foreign exchange allocation in the economy, improvement of liquidity in the foreign exchange market, reduction in the current trade arrears, reduction in the arrears of remittances.”
Contrary to all expectations, however, the foreign exchange market has become very illiquid and all efforts made to redeem the situation by the apex bank have yielded no respite to the manufacturing sector.