Forex paucity forcing users to consider painful alternatives- Coleman Wires CEO

…urges CBN to increases  supply of Forex to meet the demand at a market equilibrium price

The current uncertainties in the Nigerian Forex market are posing a great challenge to the relevant administrative authorities and the industry as a whole even as the scarcity is already forcing businesses to consider painful alternatives such as the black market.

Industrialist and Managing Director /CEO of Coleman Wires and Cables, Mr George Onafowokan, who made this submission in an exclusive chat with members of the Commerce and Industry Correspondent Association of Nigeria in his office in Lagos, said the paucity of foreign exchange is making things difficult for the real sector and constitutes a drag to the economic development of the country.

“The inconsistencies, poor management and lack of inflows prompt bidders to place higher bids than they actually need because at the end they may not get up to 20 per cent of the Forex amount.”

“This gives rise to blotted figures that does not reflect the actual demand in the market leading to further devaluation of the local currency, “he said.

Recall that the On Tuesday, July 27, 2021; the Central Bank of Nigeria (CBN) banned the sales of foreign exchange (FOREX) to the Bureau de Change operators (BDCs) in the country. The apex bank said it took the decision because the BDCs have become a conduit for illicit FOREX flows and graft, adding that it would also no longer process applications for BDC licences in the country.

To this effect, therefore, henceforth, it said, “banks are mandated to immediately and transparently” sell FOREX to customers who present the required documents. “All banks are to immediately create dedicated tellers for the same purpose,” said the CBN Governor Godwin Emefiele. Therefore, according to Emefiele, weekly sales of FOREX by the CBN will henceforth go directly to commercial banks which have been mandated to sell to Nigerians.

 But in spite of this measure, Forex crisis has persisted, giving the impression that banks have not been able to fill the gaps created by BDCs ban.

Mr Onafowokan, who is a nominee for the 2021 prestigious CICAN Award stressed that the scarcity of Forex is forcing businesses to consider painful alternatives such as the black market

He argued that if the apex bank increases the supply of Forex to meet the demand at a market equilibrium price there would come a time when investors and other stakeholders will be seeking to buy the Naira in exchange for foreign currencies thereby strengthening the local currency.

 He advised the government to settle all outstanding Forex liabilities as the first step towards easing the current crisis in the market as well as allow the Naira to find its true exchange rate.

“I wouldn’t say the current exchange rate of about N430 or thereabouts is a true reflection of the market price but somewhere between that and N500.”

Onafowokan said Government can borrow a leaf from Coleman Wires and cables that has devised ingenious ideas to solve difficult problems.

According to him, the company has within 6years exited a negative position to grow its net worth into billions of Naira and is now working with the Transaction Company of Nigeria (TCN) to ensure steady power supply in the country with the supply of one of the latest technology driven power conductor, Gap Cable, that has the capacity to carry more load than existing cables.

“Our company has acquired the technology and capabilities to manufacture various cables that were previously imported with huge foreign currencies.

“We now produce; Gap Cables and Marine Cables. The company in collaboration with our foreign partner has acquired all the necessary equipment and technology to produce Fiberoptic cable in Nigeria. This would be first in the whole of West and Central Africa.”

According to the industrialist, who is also the Chairman, Electrical/Electronic Sectoral Group of MAN, Coleman Wires and cables has been able to ward off stiff competition from imported wire products and is now a dominant global player in the industry with quality and affordable products.