The Nigerian Association of Chambers of Commerce Industry Mines and Agriculture, NACCIMA, has sought for provision of window to cover foreign exchange component intervention by the Central Bank of Nigeria, CBN.
The Association said this has become important given that access to forex is a cause for concern for members.
Its National President Ide John Udeagbala, noted at its 3rd quarter Council meeting for 2021, which held in Akure, Ondo State, complained that some members who have accessed CBN interventions to fund importaion of machinery and equipment are faced with a major challenge of repayment, as there was no window of provision to cover the foreign exchange component for such interventions.
Udeagbala, observed that the commercial banks who bid fortnightly for FX are only allocated small percentages of the bidding amount and therefore urged the CBN to provide a special window for foreign exchange when providing these loan interventions for Nigerian businesses.
“There are some of NACCIMA members who conducted feasibility analysis and applied for CBN loan interventions to enable them import machinery to boost production when the exchange rate was at N370 to $1. However, from the time the loans are approved up to the time these machines are fabricated, the exchange rate has shot up by almost 40% thereby increasing the eventual cost of these machines, making it almost impossible for businesses to pay back these loans due to the loss incurred due to the change in exchange rate.” he explained.
Speaking on the Foreign Exchange (ForEx) issuance to BDCs, Udeagbala believed that CBN’s action to suspend the issuance of forex to BDCs will depend on the efficiency of its alternative, which is the use of Commercial Banks to carry out forex sales to the general public.
The President noted that as long as the demand for ForEx outweighs the supply, the issues of inaccessibility and high rates will remain, adding, “This is largely because our economy remains import dependent for raw materials and intermediate goods on which our production activities rely on. The government needs to do more to promote and encourage exports from Nigeria such that more forex is earned into the country.”
On the Petroleum Industry Act, he said the focus of the Association should be how the Private Sector can become the key players in the Upstream, Midstream and Downstream of the Oil and Gas Sector.