Lagos — Although there has been renewed calls for the removal of the exclusion of 41 items from the list of eligible foreign exchange by the Central Bank of Nigeria (CBN), manufacturers have said the restriction of importers of the items from the official foreign exchange window has curbed the level of products dumping in the country.
In 2015, the CBN had listed 41 items that were no longer eligible for foreign exchange in an effort to encourage local production and conserve the depleting foreign reserves of the country and the depreciating value of the naira.
The list included: rice, cement, margarine, palm kernel/palm oil products/vegetable oils, meat and processed meat products, vegetables and processed vegetable products as well as poultry (chicken, eggs, turkey), private airplanes/jets, Indian incense, tinned fish in sauce (Geisha)/sardines), cold rolled steel sheets, galvanized steel sheets, roofing sheets, wheelbarrows, head pans, metal boxes and containers enamelware, steel drums, steel pipes and wire rods (deformed and not deformed).
Others are iron rods and reinforcing bars, wire mesh, steel nails, security and razor wire, wood particle boards and panels, wood fiber boards and panels, plywood boards and panels, wooden doors, furniture, toothpicks, glass and glassware, kitchen utensils, tableware, tiles (vitrified and ceramic), textiles, woven fabrics, clothes, plastic and rubber products, cellophane wrappers, soap and cosmetics, tomatoes/tomato pastes and Euro bond/foreign currency bond/share purchases were also affected.
Two years down the line, manufacturers say the policy has helped in curbing the level at which finished goods are being dumped into the country and improving the lot of local manufacturers. The managing director and Chief Executive of Psaltry International Limited, a local manufacturer producing industrial starch, Yemisi Iranloye told LEADERSHIP that the policy had made foreign exchange scarce for importers to flood the Nigerian market with excess finished products.
According to her, the policy of the 41 items have helped the company cited in Ado-Awaye, Oyo state to compete better. Noting that the cost of production in countries like China are much lower, she said the dumping of such cheap and mostly substandard products took a heavy toll on the local manufacturers.
She said: "Our production cost here is far higher than the production cost of our competitive countries like china which is really our headache. Their production cost in china is far lower than what we produce. So the lack of foreign exchange for some of those commodities has stiffened the dumping, it has stiffened the opportunities for more of those products to come in. So that has helped us to be able to compete more favourably with those commodities."
Likewise, the deputy managing director of Tempo Group of the Otta, Ogun state-based manufacturers of packaging and foods products, Nassos Sidirofagis, said the company is a good example of Nigerian companies that were losing money due to importation and dumping of competing products.
However, he said the story has changed today as the company has been exporting its products since the second half of 2016. Sidirofagis, said since the introduction of the policy more than two years ago, Tempo Group has witnessed significant changes in the demand for its products.
"Although we are in the middle of a serious economic crisis, which makes it difficult to see the full impact of the policy yet, the country is moving in the right direction. The introduction of the policy by CBN made Tempo Group to declare profit for the first time last year in many years.
"This could not have happened three to four years ago", he stated adding that the profit, he said the company was able to acquire another automated machine to expand its operations and production to meet growing demand.
Iranloye of Psaltry International Limited also noted that since the policy kicked off, the company has made considerable progress doubling its production capacity as the number of its clientele consisting of multinationals increased.
On his part, the Managing Director of Royal Plum Nigeria Limited, local manufacturers of toothpick, Amadi Ogbebor, said the company was an idea borne out of the 41 items policy. According to him, he had been moved by the statement of the governor of the CBN, Godwin Emefiele that toothpicks which could be made in the country are being imported.
The Minister of Finance, Kemi Adeosun had recently urged a Japanese Trade and Investment Mission to Nigeria to invest in the country by setting up manufacturing plants, instead of shipping-in finished products.
The CBN governor had noted that the high import bills, particularly for food and other items that could be produced locally, accounted for the sharp decline in the country's external reserves, from $34.2 billion to $28.28 billion.
The restriction of access to foreign exchange by importers of 41 items was one of CBN's alternative strategies to conserve forex hitherto used to fund such imports, to reactivate local industries, create jobs and save the Nigerian economy from sinking, amid falling oil money.
The policy appears to be achieving its goals. Vice President Yemi Osinbajo said at the 16th Conference of Speakers and Presiding Officers of the Commonwealth, Africa Region in Abuja recently that Nigeria's rice importation dropped by over 80 per cent in the last two years.
Also, the NBS Foreign Trade in goods statistics for the first quarter of 2017 speak of the huge impact of the CBN intervention on the economy. The report said Nigeria's total trade volume for the period stood at about N5.3 trillion, a 12.3 per cent growth from about N4.72 trillion in the third quarter of 2016.