The Nigeria Employers’ Consultative Association has warned that the Central Bank of Nigeria’s recent policy on Form ‘M’ will negatively impact the economy.
NECA, in a letter addressed to the CBN Governor, Godwin Emefiele, said it wanted an audience with CBN to further engage on the matter, to find a solution that will not negatively affect businesses.
The association’s Director General, Dr. Timothy Olawale, who signed the letter, said, “The exclusion of procurement companies from ‘Form M’ will cause significant business disruption for many manufacturing companies because of existing medium to long-term contractual obligations with centralised procurement agencies.
“Dismantling such arrangements and contracts would not only result in losses for these companies in Nigeria but would also disrupt production schedules, which are planned long in advance.”
The letter added, “Other attendant complications on manufacturing companies include a reduction in productivity, loss in business revenues, supply chain disruption, all potentially resulting in loss of employment for many Nigerian employees.”
The employers’ body also reasoned that the policy had the potential to worsen the impacts of COVID-19 on the real sector.
It explained further that while we appreciate the need for the government to embark on various measures to mitigate the impact of COVID-19, including the restrictions across different sectors, a business survey conducted by NECA with a view to gauging the specific impact of the pandemic revealed that “74.2 per cent of enterprises have either stopped operating or are at their lowest ebb.”
NECA also claimed that 78.2 per cent of enterprises in Nigeria have had supply challenges, which would be worsened by the elimination of centralised procurement from their value chain.
For the successful implementation of the policy, besides engagement with the stakeholders, NECA urged CBN to put in place a system to monitor, identify and penalise abusers of the nation’s foreign exchange mechanism.
“NECA is pleased to support the development of such systems, in line with global best practice. In the alternative, we appeal to the CBN to convene a stakeholder engagement session with NECA and chief executives of our member companies who are impacted, to arrive at a moratorium that would enable them to build a relationship with the final suppliers and original equipment manufacturers over the period of moratorium,” said the letter.
