Huge Job Cut Looms As Dollar Hits N590, Forex Scarcity Hits Harder
The persistent foreign exchange scarcity in the country has continued to get worse even as the exchange rate on the parallel market is inching towards N590/$1.
According to the Manufacturers Association of Nigeria, the development may lead to a huge job loss in the manufacturing industry, among other sectors.
The development comes over eight months after the Central Bank of Nigeria halted the sale of forex to Bureau de Change operators and promised to boost liquidity in commercial banks.
Checks on Tuesday revealed that the exchange rate stood at N585/$1 and N785/£1 on the black market as against the N582/$1 last Friday.
“The naira will keep falling because those who need dollars cannot get it and they will patronise the parallel market, increasing demand. It is also one of the fallouts of an election year. We are not earning as much FX and we will spend more financing on petrol subsidy. Ultimately, there will be a wider gap between the import and export window and the parallel market,” a source said.
On the job losses, he said, “It is very difficult especially for small scale industries because if you are not producing, how will you pay salaries? So, industries might be forced to ‘right size’. That is why we are making all these consultations in order to be able to get the attention of the government.
“The scarcity of forex is also unfortunate because it affects the manufacturing sector more than others. The manufacturing sector has a multiplier effect on the economy and this sector ought to receive priority. Our members are given ridiculously low amounts in the face of huge demands.
“We need forex for materials and spare parts which are not locally available. We were encouraged when the CBN said it stopped allocation of Forex to BDCs in order to put more money in the banks but down the line, this has not happened. We got to the BDCs for more than 90 per cent of our needs. When you ask for $400,000, you are given $2,000. You ask for $1m, you are given $50,000. This is ridiculous.”
