CBN’s Special Forex Window for SMEs and Manufacturers’ Views

foreign exchangeHello Reader,

As part of the moves to ease forex sourcing for SMEs, The Central Bank of Nigeria (CBN) declared on Monday that it had opened a special foreign exchange window for the Small and Medium Enterprises (SMEs). Accordingly, the window would enable SMEs import eligible finished and semi-finished items of not more than $20,000 for an enterprise, per quarter.

The information was related in a statement by the CBN’S Acting Director, Corporate Communications, Mr. Isaac Okorafor that the apex bank’s special intervention was occasioned by its findings that a large number of the SMEs were being crowded out by the forex space by large firms. According to the statement, under the special arrangement, the enterprises with staff strength of between 10 and 199 and asset base of between N5m and N500m would be offered the opportunity to import eligible items within the approved threshold:

“In the weeks ahead the (Central Bank) will sustain its intervention through the sale of foreign exchange to all segments of the market. “The bank will sell short-tenured forwards of seven-day to 30-day maturity to meet demand of manufacturers and all other foreign exchange users.

“These significant injections of foreign exchange into the market should reassure all foreign exchange users of our determination to continue to meet all legitimate FX demand in the market while striving to achieve exchange rate stability in the market.

This is however subject to the following requirements:

  • Duly completed form ‘M’ on the CBN single Window.
  • Bank Verification Number
  • Submission of the shipping documents not later than 60 days from the date of the telegraphic Transfer (TT). While the funds will be sold at the rate of N360 per US Dollar, and only eligible import items qualify for funding.

Meanwhile reacting to the new CBN’s special forex window for SMEs, the chairman of the Manufacturers Association of  Nigeria (MAN) Ogun state Mr Wale  Adegbite on Wednesday in Ota, told the News Agency of Nigeria (NAN) that an upward review of $100,000  would help the Small and Medium Enterprises (SMEs) to import raw materials and boost the economy, but regretted that the $20,000 approved amount  was not sufficient for the SMEs to import eligible finished and semi-finished items into the country:

“The new special window just introduced for the SMEs by the apex bank was too nominal and small for them to import goods into the country,” he stated. Adegbite said that an upward review of the intervention by the CBN would facilitate activities of SMEs that would further create employment opportunities. Adegbite also reiterated the need for the apex bank to open another special window for manufacturers to enable them to operate maximally since the $60,000 incentive had been discontinued:

“The SMEs and manufacturers form the bedrock of any nation because they play vital roles in economic development as well as providing jobs for the people.” (NAN)

And the important contributions are: Can $20,000 really be enough to import eligible finished and semi-finished materials to support manufacturing activities with the prevailing rate of foreign exchange? Is it a case of more and more demand on the part of the SMEs? Will an upward review of say $100,000 lead to importation of more finished foreign products while local production suffers? Will another special forex window lead to dollarization of the economy and round tripping?

Meanwhile the issues of local alternatives go beyond forex as we also have to look at local transportation costs, electricity, taxes and other local accompaniments to local production, to make home made more meaningful, as conveying goods from one part of the country to the other costs more than imports in some cases. Overall, we leave the forex issues in the hands of the experts. The time to think and act is now; these are life and business essentials, so let’s keep thinking clearly. Thank you for reading and do have a beautiful day!

Your suggestions, comments or contributions are highly appreciated.

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CBN’s Special Forex Window for SMEs and Manufacturers’ Views

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