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Manufacturers Accuse Banks of Forex Racketeering

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Nigerian manufacturers have accused commercial banks in the country of engaging in foreign exchange racketeering, which has been fuelled by acute shortage of hard currency in the economy, according to Punch.

The manufacturers also called for the immediate review of the forex policy of the Central Bank of Nigeria (CBN) which they described as a failure so far.

The CBN has been rationing forex to manufacturers and other prospective importers through commercial banks following the fall in the global price of crude oil, Nigeria’s biggest forex earner.

Dr. Frank Jacobs, president, Manufacturers Association of Nigeria (MAN) said members of the association had on several occasions, complained about being on the wrong end of the racketeering involved in the allocation of forex, adding that affected persons are afraid to identify those responsible for the corrupt practice.

He said, “Our members have been reporting that there are some shady deals going on in foreign exchange market, so we have received a number of those reports but the unfortunate thing is that nobody wants to come out to say they are ready to identify the persons behind it.”

Jacobs, however, noted that the people behind the racketeering would continue to exploit the CBN’s forex policy that leaves a lot of difference between official forex rate and that of the parallel market, if the apex bank fails to immediately review its forex policy.

He said, “I like the recent call made by the National Executive Council on the CBN to look at the forex policy. The policy has not stabilised the naira as the naira has continued to fluctuate. So, we need to move away from that policy and try something else because it is not working.”

Mr. Abubakar Malami (SAN), Attorney General of the Federation and Minister of Justice,  had on Wednesday, said he had received petitions supported by documents, alleging corruption in the CBN’s forex allocation and transactions.

But the CBN had debunked the allegations in a publication posted on its website, saying it neither allocated foreign exchange nor did it deal directly with bank customers.

It insisted that its forex policy was transparent, adding that it was not responsible for fixing forex rates for transactions by individuals or companies.

Meanwhile, the alleged foreign exchange racketeering has been identified as one of the factors frustrating importers from having access to CBN’s intervention forex funds.

For instance, in November 2016, the CBN announced that it had given manufacturing industries access to foreign exchange valued at over $660m in the interbank market to source raw materials and spare parts for their industries courtesy of the interbank forex market.

But according to manufacturers, even though the CBN has been making forex available from time to time, it has largely been inadequate to cater for their needs.

Jacobs said, “I know about $400m and $500m (made available). What is on now is $2.8bn that the CBN is saying it gave to the real sector, including manufacturers and I’ve just received some documents related to it and still awaiting the rest of them.

“If the CBN gives manufacturers N1bn every month, I believe it will take care of most of their problems. In January, what the manufacturers got from the document they sent to me was about $500m and if that is brought up to N1bn, I am sure it will go a long way in addressing the forex challenges for manufacturers.”

Jacobs said what the forex manufacturers had been getting had only aided them to keep their businesses afloat.

Also, Charles Beke, chairman, MAN, Rivers State chapter, said, “If you asked me if I was aware of the CBN policy to assist manufacturers to access forex, I would say yes. But it is one thing to have a policy and another thing to implement it.

“Manufacturers across the nation, not just in Rivers State, face forex crisis and it is having negative implications for our operations.”

In Akwa Ibom State, Mr. Iniobong Jackson, chairman, MAN, said many factories had closed down in the state because of lack of access to forex to import raw materials.

He noted that inconsistency in government policies made it difficult for manufacturers to plan properly, describing the current period as bad for manufacturers.

“Many people have closed down their factories because access to forex has been almost impossible,” he added.

Chief Kola Akosile, president, Ekiti State Chambers of Commerce, Industry, Mines and Agriculture, also said the state manufacturers had not benefited from any forex intervention from the CBN.

The immediate past President, Kwara State Chamber of Commerce, Industry, Mines and Agriculture, Chief Hezekiah Adediji, said to the best of his knowledge, no member of the association had  accessed forex from CBN’s intervention, including the $660m window in the interbank market as promised in November 2016.

He stated that the problem was because many of its members were not aware of the intervention funds.

Adediji said, “No manufacturer in the state has accessed the forex as far as I know. CBN does not make much publicity about some of its intervention funds. Many manufacturers are not aware of such development. They do not know where and how to access the money.”

“It is affecting us because we are not making progress, when you are handicapped; there is not much a business owner can do.”

The Chairman, MAN, Edo/Delta Branch, Dr. Unuigboje Alofoje, lamented that its members had had a difficult time accessing forex from banks in the region, stressing that Nigeria had been a country of buying and selling with the manufacturing sector almost totally neglected by the government.


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E-Financial

Nigerian Manufacturing Sector Contracts for 5th Consecutive Month – CBN

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The Manufacturing Purchasing Managers’ Index (PMI) in September stood at 46.9 index points, indicating a contraction in the Nigerian manufacturing sector for the fifth month.

This was disclosed by the Central Bank of Nigeria (CBN) in its September PMI report released last week.

According to the report, four out of the 14 sub-sectors surveyed reported expansion (above the 50 per cent threshold) in September.

It listed the expansion order as electrical equipment; transportation equipment; cement and nonmetallic mineral products.

It said the remaining sub-sectors reported contractions in the following order: petroleum & coal products; primary metal; furniture & related products; printing & related support activities; food, beverage & tobacco products; textile, apparel, leather & footwear; chemical & pharmaceutical products; fabricated metal products and plastics & rubber products; while the paper product sub-sector was stable.

Production

At 47.3 points, the production level index for the manufacturing sector indicated contraction in September for the fifth consecutive month.

Of the 14 sub-sectors surveyed, five recorded increased production level, one reported same level of production, while eight recorded declines in production.

New Orders

At 46.4 points, the new orders index also contracted in September for the fifth consecutive month. Six sub-sectors reported expansion in new orders, while the remaining eight recorded contraction in the month.

Supplier Delivery Time

The manufacturing supplier delivery time index stood at 53.5 points in the month, indicating a faster supplier delivery time for the fifth time.

Six of the 14 sub-sectors recorded improved suppliers’ delivery time, five reported same level, while three recorded slower delivery time

Employment Level

The employment level index stood at 44.1 points, indicating contraction in employment level for the sixth consecutive month.

Of the 14 sub-sectors, two recorded growth in employment, three recorded same level of employment, while the remaining nine recorded lower employment level in the review month.

Raw material Inventories

The manufacturing sector inventories index also contracted for the sixth consecutive time in September to 43.0 points. Four of the 14 sub-sectors recorded growth in inventories, while the remaining 10 recorded lower raw material inventories.


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FG Sacked IST Members over Fraud- Ahmed

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Mrs Zainab Ahmed, minister of Finance Budget and National Planning, has said the Federal Government sacked some past members of the Investments and Securities Tribunal (IST) as they indulged in corruption.

FG Sacked IST Members over Fraud- Ahmed

Inaugurating the new members, the minister charged the new members to eschew corruption and be forthright.

Bar. Azi Amos Isaac was appointed as Chairman for a five year term and Bar. Nosa Smart Osemwengie, was re-appointed as member for a second term of four years.

“The problem with the tribunal has been infighting amongst members, lack of industrial harmony and series of complaints bordering on maladministration.

“This has been the bane of the tribunal and a source of embarrassment not only for the Ministry of Finance but for the government in general,” Ahmed said.

The new chairman, Azi, assured the finance minister that, “the teething issue of restiveness has been addressed since he assumed duty,” adding that, “The place is calm and the staff have become very supportive.”

Azi said since 2003, the tribunal has “given judgment in the value of assets worth over N844 billion and that from 2017 to date, they have given decisions in monetary value totalling over N28bn.

“It has not failed in its adjudicatory responsibility.

“It has carried out its assignment with candour and integrity and intends to improve on what has been on ground.”

 


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CBN Bans Customer-to-Customer Forex Transfer

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Central Bank of Nigeria (CBN) has banned transfer of foreign exchange (forex) from one customer to another.

CBN Bans Customer-to-Customer Forex Transfer

According to the apex bank, forex cash lodgements into domiciliary accounts can only be done by the account owners henceforth.

An internal memo available in the media space explains that the new guidelines are necessary to review the utilisation of inflows into customers domiciliary accounts.

The circular states: “Forex inflows cannot be credited to customers until the legitimacy of funds is established.

“They can have unfettered access by telegraphic transfers up to a limit of $40,000 monthly for payment of medical bills, school fees, subscription to professional bodies subject to existing CBN guidelines.

“Transfers from one customer to another is prohibited. Transfer within related companies is allowed subject to a limit of $50,000 per month.”

It recommended that proceeds from non-oil exports should be sold to banks, used for repayment of dollar term loans, and self-utilisation for trade transactions for LC, bills and Form A.

Also oil export proceeds from E&P companies are to be used to pay contractors and service providers employed by the oil companies in addition to the recommended uses for non-oil FX proceeds.

Offshore forex inflows from other Nigerian banks and internal account to forex transfers sourced from offshore inflows are to be used for trade transactions subject to eligibility for E-Form M.

“Upon confirmation of the legitimacy of the inflows, customers can have unfettered access, subject to a maximum of $50,000,” the document read.

“Utilisation for trade transactions subject to processing of eligible trade transactions using E-Form M. Payment for services must be backed with demand note from offshore beneficiary and other regulatory documents.

“Related party transfers are allowed to the maximum of the inflow received. The transfer request should be backed by a signed instruction from the account holder.” Payment of government fees and levies are also allowed to the maritime, oil and gas, aviation. government parastatals and export processing zones.

 


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