To avoid negative impacts on businesses in the already turbulent economic environment, brand owners under the umbrella of the Manufacturers Association of Nigeria (MAN) have asked the Central Bank of Nigeria (CBN) to resolve the unsettled $2.4 billion forex forward claims by manufacturers in the country.
In a statement signed in Lagos by the Director-General of MAN, Segun Ajayi-Kadir, the body urged the CBN to address the outstanding foreign exchange obligations and reduce the current pains experienced by the manufacturing sector.
Ajayi-Kadir noted that many businesses had borrowed money from banks as working capital to open lines of credit based on anticipated prompt forex payment from the CBN.
He pointed out that the $2.4 billion in forward contracts, from a backlog of $7 billion, had sparked a severe crisis for the manufacturing sector and the Nigerian economy.
He added that businesses with significant foreign exchange liabilities were facing serious credit and liquidity risks due to their inability to settle these forward contracts.
The statement reads, “Worse still, the commercial banks have continued to charge dollar accounts along with other Naira bank charges such as 35 per cent interest rate on the facilities that these companies have with their banks.
“This rather worrisome breach of contract has further exacerbated currency risk for businesses, leading to substantial financial losses and operational disruptions.”
“The resulting financial strain on manufacturing businesses has led to widespread closures, job losses, and economic turmoil,”
Ajayi-Kadir urged the CBN to prioritize the sanctity of contracts and expedite efforts to protect the interests of businesses that have acted in good faith.
According to him, reneging on these legally binding contracts could potentially undermine the CBN’s credibility and harm investor confidence.
He mentioned that MAN urged collaboration between the CBN, the Federal Ministry of Finance, and the private sector to create a sustainable framework for resolving outstanding forward contracts and improving foreign exchange inflows to prevent further damage.
He emphasized that by prioritizing the survival of the manufacturing sector, the government could mitigate the negative impacts of the crisis and support economic recovery.