MAN predicts further rise in consumer prices over CBN’s forex policy
WORRIED by the continued hard stance of the Central Bank of Nigeria (CBN) in defining the HS codes of imported raw materials used by manufacturers, the Manufacturers Association of Nigeria (MAN) has predicted a further rise in inflation if the concerns are not addressed.
MAN President, Dr. Frank Udemba Jacobs noted that the apex bank’s policy barring 41 imported products where some of which are input materials for manufacturing from the exchange market, will definitely constitute a huge set-back to the manufacturing sector especially as the sector is 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.
Jacobs, while addressing journalists in Lagos, recently, said the association is apprehensive that the new policy could cause an increase in the general price level which consequently could lead to higher inflation, pointing out that noticeable increase has 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 is 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.
He recommended that to avert the negative situation posed by the policy, the CBN should conduct an extensive study to determine the status of domestic capacities of those items identified in the policy, maintaining that the study will help reveal, among other things, the actual items that need to be excluded from the market.
He called for a closed collaboration of CBN with the association to identify the items excluded from the market to ensure the continuous existence of factories and their social benefits of employment generation and improvement in the well-being of the citizenry.