LCCI: CBN Policy on import payments will drive domestic industries underground 

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Says it’s anti business sustainability, recovery 

“It is impractical to expect all importers of raw materials, equipment, and other inputs to buy directly from the ultimate producer, manufacturer, or supplier, especially in an economy driven by SMEs.”
With those words , the Lagos Chamber of Commerce and Industry,  LCCI, lent its voice to  calls by Manufacturers Association of Nigeria,  urging Central Bank of Nigeria (CBN) to review its new policy on payments for imports to save the already ailing and distressed Nigerian economy from complete collapse.
 
Recall that the apex bank’s circular of 24th August 2020 directs that Form M for Letters of Credit, Bills for Collection, and other forms of payment should only be opened in favour of the ultimate supplier of a product or service.
Reacting, Dr.Muda Yusuf, Director-General  of LCCI, noted that even in the domestic economy, distributors and dealers form the bridge that connects the major manufacturers to the retailers and consumers.
” Middlemen play a critical role in the supply and distribution chain in any economy, domestically and globally. They bring a great deal of value to the process,” he said.
He said that while the LCCI appreciates the efforts of CBN in curbing abuses in the foreign exchange market, this policy measure would create more problems than it would solve.
“Already most foreign exchange transactions have been frozen on account of this circular.  What this means is that the supply chain of over 80% of the business community has once again been disrupted and dislocated.
“This is like substituting the global supply chain problem with a domestic supply chain disruption,” he said.
He stressed that CBN ought to understand that
many businesses are yet to recover from the devastating shocks of the Covid 19.  Some have in fact collapsed, while others are struggling to regain momentum.
This Policy is against business sustainability,  recovery 
This policy negates the current laudable efforts by the government [and even the CBN itself] to ensure business continuity, sustainability, and recovery. It is also in conflict with the letters and spirit of the Economic Sustainability Plan of the Federal Government,” he added.
 The SMEs are the most vulnerable and would be the first set of casualties of this policy for the following reasons:
• They do not have the capacity to place huge orders that the main producers or manufacturers would require.
• Many of them currently enjoy suppliers’ credit from the agents from whom they buy, a privilege they would not get from the original product manufacturers.
Some enjoy up to six months bills for collection on raw materials imports.
• The liquidity crisis in the foreign exchange market has worsened the perception and country risk of Nigeria in the international trade arena as many foreign payment obligations are not being met.  Some domestic investors have in fact lost their foreign credit lines as a result.  This naturally creates difficulty in doing business with the main manufacturers or suppliers.
“The LCCI hopes that the new policy on payment will be urgently reviewed to avoid further disruptions to businesses,” he said. 

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