- Manufacturers starved of foreign exchange by state policies
- Government relies on oil sales for two-thirds of revenue
Nigerian Trade and Investment Minister Okechukwu Enelamah and central bank Governor Godwin Emefiele are discussing ways to ensure supplies of foreign exchange to manufacturers in the West African nation as the plunge in oil prices constricts dollar inflows.
“My minister is engaging with the central bank governor and other key stakeholders to ensure that the interests of manufacturers are taken care of” in the provision of foreign exchange, Omotara Awobokun, director of trade at the ministry of industry, trade and investment, said in an interview Tuesday. “I am sure a lot of suggestions and initiatives are on the table,” she said in the commercial capital, Lagos. She declined to specify what options are being considered before the government completes its proposals.
The Manufacturers’ Association of Nigeria proposed to the central bank in February that it sell dollars directly to the industry group’s members at weekly auctions, bypassing commercial lenders. The plan is an attempt to counter a shortage of foreign exchange and to save jobs, Ali Madugu, a vice president of the association, said in a March 3 interview.
Nigeria derives about two-thirds of government revenue from oil, which slumped to a 12-year-low this year. Authorities have 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, reaching 324 per dollar on Tuesday, according to Lagos-based Everdon Bureau de Change.
Companies have written to the ministry, expressing the difficulty they face obtaining dollars, Awobokun said. “Manufacturing is the alternative to the dwindling oil sector” and to be able to support efforts to diversify the economy, producers need foreign exchange to import equipment, she said.
Nigeria’s industrial sector contracted in the fourth quarter of last year.
Growth in Africa’s biggest economy and oil exporter slowed to 2.8 percent last year, the weakest level since 1999, the statistics agency said March 10. Industrial output contracted 2.2 percent last year, compared with expansion of 6.8 percent in 2014.