Don't Miss


Home   >   Business   >   Industries   >   Economy   >   We’re going bankrupt – Non-oil exporters cry out

We’re going bankrupt – Non-oil exporters cry out

By on July 17, 2015

Operators in the agro-allied industry, a major non-oil export sector in Nigeria, say they are daily losing billions of naira in revenue. And many have thus resorted to changing business on account of this.

Findings by our correspondent revealed that the sector has been hard hit by a combination of factors, chief among which are poor infrastructure, rising cost of produce, continued fall in the value of the naira and the Central Bank of Nigeria’s policy on the utilisation of foreign exchange.

According to the President, Federation of Agricultural Commodity Associations, Dr. Victor Iyama, many operators in the sector are battling huge debts from bank loans, which is making them to either reduce staff strength substantially or shut down operations.

Iyama attributed the challenges in the sector to the CBN forex utilisation policy, noting that since the implementation of the policy, most non-oil exporters had gone bankrupt.

The CBN on February 19 issued a circular in respect of the repatriation of export proceeds. The circular under the subject, ‘Repatriation of export proceeds (oil and non-oil), had mandated all authorised dealers to repatriate proceeds of oil and non-oil exports into the domiciliary accounts of their respective exporters.

The circular signed by the Director, Trade and Exchange Department of the CBN, Olakanmi Gbadamosi, stipulated 90 days for the repatriation of oil export proceeds and 180 days for non-oil exports.

Iyama said by implication, the policy mandated exporters to sell their forex to the CBN at the official rate of N199 to a dollar and the operator would not be permitted to sell to any other buyer.

He said, “For every $200m an exporter brings in, he loses N70m factories are closing every day and most of us have sacked many of our workers.”

The reason is because we do not buy produce at the official exchange rate. We buy at parallel market rate. We even borrow money to buy produce and the money is given to us at parallel market rate.

“The farmer who is selling the produce is not interested in the CBN policy; he keeps tap on the exchange rate. If he is not educated, he has children who are educated and all they need to do is tell him about the trend of the foreign exchange and the current price of his commodities in the global market and that price is what he will sell his produce for.

“Even chemicals that are used in growing crops are imported at parallel market rate and the prices go up every day.”

The CBN had put up the directive as part of measurers to conserve foreign exchange in the wake of the global oil slump, which led to the depletion of the nation’s foreign reserves and eventual devaluation of the naira.

But Iyama argued that the direction of the policy was wrong as it was not achieving the desired result.

“You cannot conserve foreign exchange by destroying the sector that is giving you the foreign exchange in the first place,” he stated, adding that in spite of the measure, the dollar had continued to rise against the naira, further complicating things for exporters.

According to him, if the policy is not reversed, it is going to drive some non-oil exporters underground where they may resort to undocumented exports or use other countries as conduit pipes for their export activities.

The naira fell against the dollar on Monday, exchanging for N241 to a dollar. Analysts have predicted that the widening gap between the official exchange rate and the parallel market rate will compel the CBN to further devalue the naira.

Iyama added that the only way to shore up the value of the naira was by promoting non-oil export.

He added that as long as the CBN could not maintain one window of exchange rate in the country, it was not proper to compel non-oil exporters to sell their export proceeds at the official exchange rate.

A Professor of Economics at the Olabisi Onabanjo University, Ago Iwoye, Sheriffdeen Tella, agreed that if exporters bought produce at the parallel market rate, they would be losing money if they should sell at the official exchange rate.

He said some of the exporters also faced challenges because they did not have domiciliary accounts.

 

[Punch]