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MAN expresses worry over Nigeria’s low external reserves

By on August 13, 2015

The Manufacturers Association of Nigeria (MAN) yesterday decried the low level of the nation’s external reserves. Nigeria’s external reserves were at $31.537 billion as at last Friday.
The president, MAN, Dr. Frank Udemba, said external reserves stood at $29.01bilion at the end of the second quarter of 2015 as against the $29.62 billion of the first quarter of the current year, representing a $0.61 and 2.1 per cent decline over the period.
The MAN boss who spoke during a special briefing with journalists on the state of the Nigerian economy, stressed that when compared with the $34.246 of the fourth quarter of 2014, the external reserves declined by $5.24 billion representing a 15.3 per cent drop over the period.
He said the policy of the Central Bank of Nigeria (CBN) barring 41 imported products where some of which are input materials for manufacturing from the exchange market constituted a huge set-back to the sector especially as the sector was still beset with infrastructure and other challenges.
‎”Without doubt, therefore, the future of manufacturing will remain bleak in the nearest future in the present circumstances,” he added.
Udemba said the association was apprehensive that the new policy could cause an increase in the general price level which consequently could lead to higher inflation. He pointed out that noticeable increase had already been observed since the beginning of the fourth quarter of 2014, sending signals of rising inflation.
“The association feels that local capacities of the affected items are not adequate enough to fill the gap, avoidable shortages will be created in the economy, which will lead to escalating inflation and untold hardship as industries may close down due to lack of input material,” he stressed.
In his words, “Already economic discomfort are being posed by the various challenges in the economy and this will further worsen the Discomfort Index (DI) considering the prevailing high and rising level of unemployment in the country.”
He noted that if the policy was designed for the development of domestic production capacities as claimed by the CBN, investors may be interested in knowing how long the policy will last, saying that no rational investor would expend productive capital to increase the local capacities of the listed ‎products if such investor is not convinced on the overall consistency of the policy.

 

[ThisDay]