The Central Bank of Nigeria (CBN) Foreign Exchange (forex) policy barring importers of certain items from accessing forex is a blessing in disguise, the Chief Executive Officer (CEO), Spectra Foods Ltd., Mr. Duro Kuteyi, has said.
To him, it will serve as a catalyst to local manufacturers, especially Small and Medium Enterprises (SMEs),
Kuteyi, who spoke with The Nation, described the policy as a right step in addressing unbridled importation, which is one of the major challenges facing local manufacturing. He said the policy was an affirmation of the Federal Government's readiness to promote the backward integration policy of encouraging local sourcing of raw materials hitherto imported into the country.
"It is good for manufacturers. In the past, Nigeria was a dumping ground for imports. The dumping will definitely reduce. Like someone importing apple using scarce foreign exchange to import apple when we have fruits wasting away," Kuteyi said, pointing out that the policy was a major stimulant for local productivity.
According to him, the policy is a shot in the arm of local manufacturers, especially SMEs. "The policy is good for manufacturers, particularly SMEs, because it is directed at reducing imported finished goods. "It's an opportunity for SMEs' capacity expansion, as they have the chance of enjoying higher patronage with less competition from finished imported goods," he said.
The industrialist said prior to the introduction of the policy, imported commodities dominated the manufacturing and industrial landscape, posing a serious threat to locally- manufactured products. He said local products suffered lack of patronage, and could not stand competition with foreign products, considering consumers' penchant for foreign goods.
Kuteyi lamented:"We SMEs in Nigeria produce and find it difficult to sell in the market. Some supermarkets don't take our goods because they have the belief that they make more profit bringing imported materials to sell on their shelves. If they take products from SMEs, it is as if they are rendering a favour.
"But when they import, they pay in advance and display on their shelves. They don't encourage SMEs to thrive in Nigeria. And this has affected SMEs in Nigeria to the point that they cannot even expand.These are the things that the new policy will solve."
Kuteyi, however, said the policy will not affect those who are genuinely importing raw materials for their factories. "When you look at the genuine manufacturers, who depend on imported raw materials, these are the ones that should enjoy forex allocation. Like those who are into the making of laminated bags, rolls for manufacturers. These are packaging materials for manufacturers," he said.
While reiterating that the forex policy would encourage SMEs, he said there is need to address other challenges militating against SMEs' productivity, particularly inadequate funding. According to him, many SME owners find it extremely difficult to raise capital for purchasing requisite machineries.
The industrialist, who insisted that under-funding remained the bane of SMEs, said there is need to ensure that SMEs, who engage in manufacturing, get approval to import their machineries. According to him, about 60 per cent of SMEs depend solely on local raw materials that need not be imported and as such, should be supported to finance their businesses.
"If you look at the SMEs, a lot of them cannot raise money to import raw materials, they buy the raw materials from importers. This is a special case that Federal Government should look at," he said, adding that Bank of Industry (BoI) can make recommendation for those SMEs they have given money to or have bought machineries for that depend on raw materials so that their banks can assist them in getting forex for their raw materials.
Kuteyi, however, said the forex restriction has resulted in increase in prices. "It is either it reduces our profit or we also increase our prices to meet up with what the difficulty in getting forex has caused. For example, there is a company making carton for us but because they could not get access to forex, they reduced their production meaning that they reduced their staff. So, this is also affecting an average manufacturer," he added.