Nigeria’s biggest manufacturing body has lobbied the central bank to sell dollars directly to its members, bypassing commercial lenders as it looks to counter a shortage of foreign-currency it says threatens thousands of jobs in Africa’s largest oil producer.
The Manufacturers’ Association of Nigeria, which has about 2,700 members, proposed weekly auctions of dollars to manufacturing businesses at a meeting with central bank Governor Godwin Emefiele in Abuja, the capital, during the week of Feb. 22, according to Ali Madugu, a vice president at the lobby group.
“We’re calling for the central bank to start giving to us directly, hand-to-hand, rather than through the banks,” Madugu, who is also managing director of Kano-based Dala Foods Ltd., a food processor, said in an interview in the northern Nigerian city on March 3. “Some of our member companies will run out of raw materials next month. Without restocking, what will happen? Thousands of jobs are on the line.”
Nigeria, which derives about two-thirds of government revenue from oil, has rationed dollars and brought interbank foreign-exchange trading to a halt since February last year in a bid to prevent the naira falling. The measures have all but pegged the currency at 197-199 per dollar. As dollars have become more scarce, the black-market exchange rate has plummeted to 310, while forwards prices suggest the naira will fall to 291 in a year.
The International Monetary Fund estimates the economy grew 3 percent in 2015, the slowest pace since 1999. Manufacturing is in recession, having declined during the first three quarters of the year. President Muhammadu Buhari and Emefiele have said that boosting employment in the manufacturing sector is crucial to reviving Nigeria’s growth.
Under the current system, the central bank sells foreign exchange to commercial lenders who then distribute it to their customers. That’s left manufacturers short since the banks often prioritize other businesses and individuals, Madugu said. The MAN hopes to receive a response from the central bank this week, he said.
“The banks have everybody as their customers,” Madugu said. “They even have people buying dollars for medical bills and school fees. If the central bank believes the economy must be diversified and manufacturing boosted, they should allocate directly to us.”
MAN has asked its members what their annual foreign-exchange needs are so that it can give the central bank an indication of how big the weekly dollar sales would need to be. Ibrahim Mu’azu, a spokesman for the central bank in Abuja, didn’t answer calls to his mobile or immediately respond to a text message seeking comment.
The central bank stopped weekly auctions to non-bank money-changers in January in a bid to save its foreign reserves. Those have fallen 10 percent to $27.8 billion in the past year as Brent crude prices have declined one-third to about $39 a barrel.