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Shortage Of Forex Crippling Manufacturing In Nigeria - LEADERSHIP NEWS

Members of the Organised Private Sector (OPS) and other stakeholders in the nation’s economy have urged the federal government, through the Central Bank of Nigeria (CBN), to intervene on the challenges faced by manufacturers in accessing foreign exchange.

They also pleaded with government to patronise local software developers instead of importing solutions or software from China and other countries.

The OPS, comprising the Manufacturers Association of Nigeria (MAN), Lagos Chamber of Commerce, Industry (LCCI), and others, in different interviews with LEADERSHIP Sunday said government needs to improve access to foreign exchange for the importing of machinery and raw materials in order to boost local production and sustain the country’s fragile growth.

MAN president, Engr. Mansur Ahmed, said manufacturers are finding it difficult to source forex for the importation of machines and raw materials that are not available in the country.

“We request the intervention of the President to ensure the prioritisation of allocation for the purpose of importing raw materials and vital machines and equipment that are not available locally.”

He stated that manufacturers still contend with inadequate electricity supply from the national grid and high electricity tariff from Distribution Companies coupled with the enormous cost of providing alternative energy at over N72.7 billion, thereby limiting the competitiveness of manufacturing in Nigeria.

Ahmed noted that limited access to long term loans and high cost of loanable funds are also jointly restraining the ability of the sector to produce at full capacity and adversely affecting the contribution of manufacturing to the Gross Domestic Product (GDP).

Setting an agenda for policy makers and economic managers for 2022, the CEO of Centre for the Promotion of Private Enterprise (CPPE) and immediate past director-general of LCCI, Dr. Muda Yusuf, said the macroeconomic condition is a very important component of the business environment as it impacts a great deal on investor confidence, adding that it has implications for costs, profits, competitiveness and the sustainability of investments.

He called on government to address four key macroeconomic variables: inflation, foreign exchange, GDP growth and balance of trade.

According to Yusuf, inflationary pressure remains a major worry both for businesses and households as it remains high.

According to him, “In order to tackle inflation, we need to address the key drivers of inflation in 2022: boosting productivity in the economy to drive output growth; stemming the depreciation of the naira exchange rate; addressing illiquidity in the foreign exchange market and addressing insecurity, among others.

He added that for the economy to sustain the GDP growth, it is important to create an enabling environment for positive investor sentiments in the economy, which should be driven by policy, regulation, macroeconomic conditions, and security of life and property.

Meanwhile, in an exclusive interview with LEADERSHIP Sunday, the president of Institute of Software Practitioners of Nigeria (ISPON), Mr. Chinenye Mba-Uzoukwu, said over the years the Nigerian government has not been able to fully deploy local solutions to local problems, with the country depending on foreign countries for solutions.

Mba-Uzoukwu disclosed that Nigeria, as a country, is blessed with great software developers who have come up with several solutions to local problems, but that government sometimes does not patronise them, as they prefer to import solutions or software from China and other countries.

The implication of that, according to ISPON president, is that if this trend continues, the country will experience brain drain in the ICT sector, because a majority of young innovators are now going to other countries where their talents will be much more appreciated.

To change the narrative, Mba-Uzoukwu said, the Nigerian government and private sector should start patronising local software developed by Nigerians. That, he pointed out, will not only help retain the nation’s talents in the country but also boost its foreign reserve.

“We cannot depend on America or Germany to always come to solve our local problems for us. The government needs to look inward, work with our local software developers to solve some of the problems in the ICT sector and Nigeria at large,” Mba-Uzuokwu said.

On his part, a cybersecurity expert, Hakeem Ajijola, stated that the Nigerian ICT sector is one of the largest in Africa.

To retain that position and even do much better this year and beyond, Ajijola said government must continue to build literacy, even as he urged government to embark on a continuous capacity building and provide the enabling environment for SMEs to thrive, by signing the start-up bill into law.

Another area government should look at is the over regulation and ‘too much control of the ICT sector’, says Ajijola.

“We saw that in the ban of twitter that led to huge losses to the Nigerian economy. Certainly, there is a need for rules and regulations and enforcement, but they have to be smart rules, smart enforcement,” he added.

Ajijola also appealed to the government and its agencies to focus more on broadening and deepening the ICT sector and not solely focusing on Internally Generating Revenue (IGR), adding that IGR is not the only means to measure success.

To Professor Akpan Ekpo, former director-general at the West Africa Institute for Financial and Economic Management (WAIFEM) and chairman of the Foundation for Economic Research and Training, there is an urgent need for government in 2022 to aggressively implement the National Development Plan

According to him, doing this would see an increase in the influx of foreign investors into the country as well as the booming of the local economy and overall growth and development of the country.

“In 2022 we should begin to implement the 2021-2025 National Development Plan (NDP) aggressively, and within that context we should begin to fix power supply so that micro, small and medium enterprises (MSMEs) can grow well and create jobs.

“Also, the insecurity in the country is becoming unbearable as it scares away investors.  When we say the GDP is growing, it is a jobless growth. So, the government needs to fix power and security and all those things are in the NDP, and they ought to implement it in the first two quarters of 2022.

“If they do that, they can win back the confidence of Nigerians and investors who want to come into the county and build factories and employ people.  Right now, people have lost confidence and trust in government, but if they can do those two things and people can move around easily and do their businesses easily, they will win back the lost trust,” he pointed out.