MANEG Opposes ABCON's Advice to Exclude Non-Oil Exporters from Official Forex Market

Manufacturers oppose ABCON's call to exclude non-oil exporters from official forex market, citing impact on diversification and investment. CBN bans using non-export domiciliary accounts as collateral for naira loans.

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Nasiru Eneji Abdulrasheed
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MANEG Opposes ABCON's Advice to Exclude Non-Oil Exporters from Official Forex Market

MANEG Opposes ABCON's Advice to Exclude Non-Oil Exporters from Official Forex Market

The Manufacturers Association of Nigeria Export Group (MANEG) has voiced its opposition to the advice given by the Association of Bureaux de Change Operators of Nigeria (ABCON) to the Central Bank of Nigeria (CBN). ABCON had recommended that the CBN exclude non-oil exporters from accessing foreign exchange at the official market.

MANEG cautions that implementing this advice would discourage investment and hinder Nigeria's efforts towards economic diversification. The group's chairman, Odiri Meggison Erewa, stated that excluding non-oil exporters from the official forex market would negatively impact production costs and drive up product prices, dampening investments in the manufacturing sector.

ABCON had argued that many exporters with substantial dollar balances in their non-oil export domiciliary accounts are still sourcing forex from the official window. They advised the CBN to exclude these exporters from accessing the official market. However, MANEG plans to seek an audience with the CBN governor to stress the need to support non-oil exporters, as they are critical to Nigeria's balance of trade and economic diversification.

Why this matters: The debate over access to foreign exchange for non-oil exporters has significant implications for Nigeria's economic diversification efforts. The outcome of this disagreement could impact investment in the manufacturing sector and the country's balance of trade.

In a related development, the CBN has issued a directive prohibiting the use of non-export Domiciliary Account Collateral for naira loans, except in cases where the collateral is in the form of Eurobonds issued by the federal government or guarantees provided by foreign banks. ABCON's president, Alhaji (Dr.) Aminu Gwadabe, welcomed this move, stating that it will boost dollar liquidity, support reserves accretion, and strengthen the financial services sector.

Gwadabe explained that some companies and manufacturers with large dollar balances in their non-oil export domiciliary accounts were using them as collateral for naira loans while still sourcing forex from the official window, depleting what was available for other operators. He believes that stopping this practice will add to the dollar liquidity in the market and help in the accretion of foreign reserves buffers.

ABCON has also called for the separation of ownership and operational structures of FMDQ Exchange to ensure more transparency and effectiveness in market operations and price control mechanisms. The association has pledged its continuing support to the CBN's proactive and effective policies meant to address volatility and headwinds in the forex market.

Key Takeaways

  • MANEG opposes ABCON's advice to exclude non-oil exporters from official forex market.
  • MANEG warns exclusion would hurt production costs, investments, and economic diversification.
  • CBN banned using non-export domiciliary accounts as collateral for naira loans.
  • ABCON says this will boost dollar liquidity, reserves, and financial sector stability.
  • ABCON calls for FMDQ Exchange restructuring to ensure transparency and effective price control.