New CBN Policy: Over 40,000 Nigerians to Lose Job
There are strong indications that the new Central Bank of Nigeria (CBN) rule excluding some essential raw materials from the list of items valid for forex will in no time lead to the lay-off of over 40,000 Nigerians who work in the manufacturing sector, analysts say.
According to the Central Bank of Nigeria (CBN), the policy is intended to sustain the stability of the foreign exchange market, “resuscitate local manufacturing” of these items and change the structure of the economy.
Remi Bello, president, Lagos Chamber of Commerce and Industry (LCCI), said most manufacturers might be forced to shut down and move their operations to neighbouring countries for business activities due to their inability to access foreign exchange for raw materials and other critical inputs. This he believes would lead to massive job losses in the manufacturing sector.
“There is pressure on manufacturers to lay off their workforce before the end of the year. Most manufacturers affected have been unable to produce lately due to lack of foreign exchange, delays in the processing of Form ‘M’ to import raw materials in order to meet demands, and this has adversely led to loss of market share. With this continuing, massive job loss is anticipated in no time from now,” he said.
For example, the manufacturing sector using crude palm oil as raw material in their daily production of goods like biscuits, noodles, cosmetics etc., will be affected as the locally produced and supplied raw material cannot meet the required demand for production.
According to IndexMundi, a data portal, the domestic palm oil produced totalled 930,000 MT in 2014 while the consumption of palm oil in Nigeria amounts to 2.0 million MT per annum in exclusion of the manufacturing sector.
The LCCI president further lamented that, for an economy that was largely driven by the private investors, the government should source for alternative means rather than resulting to a total exclusion of certain items from the foreign exchange market.
He however urged the government to prevail on the CBN to review the policy in the interest of the impending danger to the workforce, the private sector and the economy at large.
The official figures state that the shortage in oil palm industry is estimated to be around 1,070,000MT annually. This poses a very precarious situation for the manufacturing sector that depends largely on CPO as a major source of raw material. If this shortage is not filled with importation of high quality food grade palm oil, the economy will lose further investment in the manufacturing sector as companies would shot down and staff be laid-off.
Among the 41 items marked as ‘Not Fit for Forex’ also include: Rice, Cement, Margarine, Meat and processed meat products, Vegetables and processed vegetable products, Poultry chicken, eggs, turkey, Private airplanes/jets, Indian incense, Tinned fish in sauce (Geisha)/sardines, Cold rolled steel sheets, Galvanized steel sheets, Roofing sheets, Wheelbarrows, Head pans, Metal boxes and containers, Enamelware, Steel drums, Steel pipes, Wire rods(deformed and not deformed), Iron rods and reinforcing bar, Wire mesh and Steel nails, Wood particle boards and panels, Wood Fibre Boards and Panels, Plywood boards and panels, Wooden doors, Toothpicks, Glass and Glassware, Kitchen utensils, Tableware, Tiles-vitrified and ceramic, Textiles, Woven fabrics, Clothes, Plastic and rubber products, polypropylene granules , cellophane wrappers, Security and razor wine ,Soap and cosmetics, Tomatoes/tomato pastes and Eurobond/foreign currency bond/ share purchases.
The resultant effect of this is an outrageous increase in the cost of these items locally for consumers and ultimately inflation, which is largely due to inability to access foreign exchange.