The Manufacturers Association of Nigeria (MAN) on Thursday lamented the current flexible exchange rate operated by Central Bank of Nigeria, claiming the policy had hit hard the manufacturing sector hard, making it loss about N500bn since it came into operation.
The Chairman, MAN, Apapa branch, Babatunde Odunayo, disclosed this, Thursday, during the 45th Annual General Meeting in Lagos of the branch.
According to him, Letters of Credit and Form Ms approved to manufacturers at N197/US$ before the introduction of new flexible exchange rate on June 20, are now expected to be redeemed at N320.
A letter of credit is a letter from a bank guaranteeing that a buyer’s payment to a seller would be received on time and for the correct amount.
“Unfortunately, this unfolding situation poses a great burden on manufacturers since the pricing of the related manufactured goods was made at N197 or N198 to US dollar when it was approved.
“Manufacturers currently face up to N500bn in exchange difference between the approved Form M and Letter of Credit established rates and the flexible market rate of N320 to a dollar.
“This is a huge loss that manufacturers are expected to bear, whereas the related goods had been mostly sold before the commencement of the new exchange rate system,” Odunayo said.
He said that the exchange rate loss of N500bn reflected in their accounts and had led to factory closure, unemployment and loss of investments in the sector.
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