Oluyinka Onigbinde
Importers of various products in the country have lamented the impact of scarcity and the widening rate of foreign exchange, especially between the official and parallel markets, They lamented that the scarcity and the widening gap between the two markets exchange rate value has affected importation in the country.
The importers, who include stakeholders in the nation’s maritime industry and the larger economy noted that the continuous slide of the Naira against the Dollar has affected the volume of importation into the country, while also adding that this is also reflecting in the very low volume of work for haulage companies and clearing agents at the ports.
Checks by the Shipping Position Daily last week revealed that the Naira slid to about N920 to a dollar at the parallel market thereby widening the gap between the official and parallel market exchange rates which still stood at N485.
Recall that the official exchange rate of the currency according to the Central Bank of Nigeria (CBN) is N435 to a Dollar.
Different importers, in a chat with our correspondent lamented that it now takes about $13000 to import 40ft containers from China and now take about N10 million to clear the same container at the port. This is against the $7,000 dollars and N4 million naira it took in the corresponding period last year.
The President, Electronics Section of the Alaba International Market, Evangelist Paulinus Ugochukwu, stated that importers are now in turbulent tides owing to lack of foreign exchange. He said importation has now become an herculean task, confirming that many of them can no longer import the volume of cargoes they import on a monthly basis, due to scarcity and high rate of foreign exchange.
He told our correspondent that: “We are facing a very big challenge now, because to source for dollars is a very big problem and we are riding in turbulent tides, because dollar is rising every minute of the day, and the worst part of it is that you can’t even see it to buy, and it’s affecting our businesses and you and I know that the cost of things in the market now is very high.
“A 40ft of container that we clear between N3 million and N4 million, we now clear it for N9 to N10 million, so how much profit are you going to make after buying dollar for N950 and the shipping company collect $13,000 for shipment from China to Nigeria and you used about N10 million to clear such container, so it is a very big problem to us”.
He suggested that the Central Bank of Nigeria (CBN) should recognise the Bureau de Change (BDC) operators and supply them with forex in order to ameliorate the soaring rate of foreign exchange.
“If the CBN recognises the black market and supplies the BDC operators with forex, it will bring the dollar down, but now many of the BDC operators are not operating, so the demand is high”, he stated.
On his part, an economist and the Chief Executive Officer of Center for Promotion of Private Enterprise (CPPE); Dr. Muda Yusuf blamed government policies for the high exchange rate, noting that the capacity of the country to fund the market has been impaired especially because of oil theft and also issues related to policies.
Yusuf added that the CBN policy is fueling speculations, corruption and round tripping and that the CBN policy on BDC operators has also affected the high rate of foreign exchange in the market.
He said: “There are policy issues and that is the way the CBN is managing the FX market, CBN has adopted a model of rationing of foreign exchange and a model of a fix exchange rate regime; that is creating a whole lot of problem in the foreign exchange market; both on the demand side and on the supply side
“On the demand side, it is fueling speculations, round tripping and also corruption. because most of the people who legitimately need this forex are not getting it and this is because of the model of allocation which is almost like an administrative kind of forex.
“On the supply side because the CBN has fixed exchange rate for N435, inflows are not coming in through official channels because nobody want to bring foreign exchange at N435 and now surrender it to the market, so the policy is obstructing supply and when you obstruct supply you create scarcity and at the same time, it is fueling demand because of those who are round tripping.
“For instance, you take $1 million from official window and sell it in the parallel market you will be making about N300 million for doing practically nothing, even those who are industrialist and importers, how much profit are they making, so a major distortion has been created by the CBN because of that”.
“Secondly, our capacity to fund the market has been impaired especially because of these oil thefts and all that and again related to policies is the issue of the BDC operators because government is no longer allocating directly to them and its affecting, and the truth is in many other climes and other part of the world, their Central Bank don’t allocate money to BDC operators, but the environment should be conducive for BDCs to be able to source independently their own funds.
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“And right now, the CBN’s policy is not in their favour, it has highly restricted how they can source their money. If they give them access similar to what we have like western unions, of course it will improve the situation, so CBN needs to relax some of its regulations. The regulations are too restrictive for the BDCs and the BDCs are the closest to the former sector and to the SMEs”.
“Another issue is that CBN is claiming it doesn’t recognize the black market, so how disconnected can a regulator be, from the reality of an economy they are supposed to be active in.
“CBN has never for one day admitted that there is a sharp depreciation in the exchange rate, so when you don’t even agree that there is a problem, how can you then come forward to solve the problem, that is very unfortunate.
“They are saying the black market is an illegal market and they don’t recognise it, meanwhile that is the market that is driving the economy”, he said.
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