Nigeria’s economy may experience
investments inflow in 2015 as the local currency appreciates by over seven
percent. The battered Naira, which sold for between 228 and 230 to a dollar at
Bureau de Change (BDC) weeks to the just concluded presidential election, has
appreciated to about 208 -211 to the dollar. Though the inter-bank rate still
stands at 197, experts are of the opinion that the exchange rate at BDC can go
below 200, as many individuals who stockpiled dollars during the presidential
campaigns are already selling it after the poll.
In the same vein, the Acting President, Association of
Bureau de Change Operators of Nigeria, Alhaji Aminu Gwadabe, said he was
expecting the Naira to appreciate further following the peaceful conclusion of
the presidential election, which allays the fear and uncertainty in the
financial market.
He added, “I think the trend would
continue for the Naira to appreciate further from 211 to 197 currently at the
interbank market rate because a peaceful economic environment is what we are
witnessing as aftermath of the presidential poll”.
It could be recalled that
weeks to the presidential election, the economy witnessed huge investments
outflow, as foreign investors pulled N846.53 billion from Nigerian Stock
Exchange (NSE). Within the same period, another investments outflow hit
Nigeria, as investors withdrew N4.9trillion from the economy.
Speaking, the Chairman Toiletries
and Cosmetics (T&C) group of the Manufacturers Association of Nigeria
(MAN) Mr. Ikpong Umoh, explained that the tension and speculation
experienced in the country before the presidential election worsen
devaluation of the Naira.
He said, “Already the declining oil
prices and devaluation of Naira brought crisis into the economic system. So,
the tension of what happens and who wins in the presidential poll made
the situation worse, as many people were afraid that the economy may collapse
completely. Aside from high exchange rate, many investors withdrew their money
and investments from Nigeria because they were afraid of losing their
investments. With the peaceful outcome of the presidential poll, we expect that
in the next four years, the economy would be stabled.
On what would be the prospect for
manufacturing sector, he explained, “Those of us manufacturers are still facing
challenges because the raw materials we use for production are imported, as
such, they are tied to dollars. Some of us have loans to pay in dollars, so we
are calling on government to support manufacturers, especially producers of
toiletries and cosmetics products. We are also appealing to government to check
the activities of regulatory agencies as they are killing Small and Medium
Enterprises (SMEs) with multiple taxes”.
He went on, “Recently, government
launched the Development Bank of Nigeria (DBN) in order to create a platform
for Macro, Small and Medium Enterprises (MSMEs) to access loans. The
effort of government in salvaging the financial needs of MSMEs through establishment
of DBN is a good initiative but may be counterproductive, as the regulatory
agencies are waiting to ambush the MSMEs with their regulatory
requirements to collect their own “share of the National cake” or embark on a
clandestine mission for some bigger companies and multinationals to
introduce tougher entry regulations to discourage MSMEs from partaking in
similar ventures that compete with their products in the market.
“In implementing this new plan of
re-invigorating MSMEs, government needs to identify and remove numerous
obstacles that can stand in the way of establishing new MSMSEs, stabilising and
expanding existing ones. Government should protect MSMEs by ensuring that
similar regulatory frameworks, either from the State or Federal agencies
are streamlined to make compliance affordable. The agencies should be
adequately funded by tax payers money as it is the standard practice
globally,so that their drive for revenue generation does not adversely
work against SMEs. Where fees are to be charged, only nominal fee of not
more than N2,500 should be allowed.
Government should establish and
enforce anti-trust laws to prevent surreptitious manipulation of regulatory
framework and market –space definition to rope in the MSMSE and force their early
exit from the market where they are already proactive.
“Government policies in attracting
Foreign Direct Investments (FDI) have also added to the problems of cosmetics
and other MSMEs. This is especially evident in the Global listing incentive
given to foreign investors in the supermarket chains. This incentive permits
them to import into the country their wares to fill the shelves despite the
fact that most of the products found in these supermarkets are already being
made by some MSMEs. The owners of such supermarkets preferentially import
products from their home country instead of patronising local suppliers. While
a handful of jobs are created for Nigerians, Multiple stream of jobs are
created for their home country labour force along every aspect of the
value chain.
“Our government needs to review this
Global Listing policy with a view to changing the shelve-display equation to
favour indigenous manufacturers. We must encourage patronage of locally made
goods to ease out importation that have local substitutes. Imposition of heavy
taxes and fines as well as quantity allocations are legitimate instruments used
by all liberalised economies to protect their local industries. America used it
against importation and dumping of Steel from China.
Nigeria can adopt these
measures to check the activities of the supermarkets. If this is done as part
of the steps to ensure the success of the DBN, the beneficiaries of loans would
have a ready market. Therefore, the percentage of locally manufactured products
in the supermarkets can progressively increase from near zero to 50 percent
this year and 80 percent by 2016.
“MSMEs has contributed immensely to
job creation with over 32million people benefiting from this sector, However,
the establishment of DBN would bring about a robust finance backing for MSMEs.
The institution plans to offer loans to about 20,000 MSMES within its first
year of operation and its billed to start full operations in 9months time.
Therefore, I would say this is a giant step towards the growth and
development of MSMEs and would like all members of the T&C group of MAN to
take advantage of this initiative to develop and stabilise their operations.
While, we applaud the efforts of
government in this direction, we want to point out that T& C group is not
only faced with the issue of funding alone but also with issues that
appear subtle but devastating in short term and long term effect. Such issues
include multiple regulations from government agencies such as NAFDAC, SON
,LASEPA,NESREA ,WEIGHTS &MEASURES among many others that are supposed to
render social services and draw their funding from taxpayers money inform of
budget allocations.
“These agencies have accused the
government of starving them of funds and therefore have to resort to “self-help
“ with their Internally generated revenue and taxation driven regulations. The
attitude of these agencies were majorly responsible for the colossal
failure of previous efforts to re-invigorate MSMEs.
MSMEs are forced to comply with
double and sometimes multiple regulations. As such, they end up
paying money to these agencies for certifications and permits. The process of
compliance gulps man-hour, management time and un-receipted sums of money ,all
of which constitute a big drain on the meager resources of MSMEs.
It should be noted that while the
large companies and multinationals can meet and surpass some of these
regulatory requirements, the MSMEs are disproportionately disadvantaged and
endangered in trying to meet some or all of these requirements. Some
MSMEs in cosmetics, soaps and beverage industry are closing shops in the
process of struggling to meet some of these excruciating regulatory conditions
of regulatory agencies.”
- See more at:
http://www.vanguardngr.com/2015/04/the-naira-recovery-at-the-black-market/#sthash.t3QBzX4A.dpuf
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