The Manufacturers Association of Nigeria has called on the Central Bank of Nigeria to reverse the circular directing authorised dealers to desist from the opening of Form M through third parties, to avoid massive factory shutdown.
President of MAN, Mansur Ahmed, made the call in a swift reaction to the circular released on Monday.
The CBN circular was to ensure the prudent use of foreign exchange resources and eliminate over-invoicing, transfer pricing, double handling charges and avoidable costs that are ultimately passed to the average consumer.
“We believe that this additional hamstring on the economy is likely to erode the recent improved performance on the ease of doing business ranking.
“Most manufacturers, especially SMEs, deal with accredited agents for their supplies as many Original Equipment Manufacturers abroad do not sell directly to individual buyers.
“In the absence of a global procurement agency, most companies would not have access to the final suppliers, who consider the inherent country risks a disincentive for trading directly with companies in Nigeria,” Ahmed said.
He added that the procurement agencies provided a vital interface between the final suppliers and the manufacturers, and allow same extended payment timelines by granting credit in periods of foreign currency scarcity.
Said he, “It is pertinent to point out that many companies have gone into contractual agreements via the procurement agencies for 2020 financial year and in some cases beyond.
“Default on these contractual obligations may result in expensive lawsuits across jurisdictions, bring disruptions to the production process and further undermine the resilience of the manufacturing sector.”
