Should we break the FOREX till for Umeofia? - Businessday

November 4, 2016
The current economic recession has generated diverse interest and comments from the clergy, economists, business circle, lawmakers, and even from common men on the streets. Some comments are patriotic and genuine, while some are not rational. To the clergy, the dwindling church collections - tithe and offerings are the fault of Godwin Emefiele. Some lawmakers without any scientific deduction linked the recession to the CBN's supposed unarticulated policies, and ineptitude of its helmsman.

Recently, there were some pockets of sponsored protest against the CBN, accusing its governor of causing economy recession. I wondered why Emefiele was singled out for crucifixion.

Before the obviously sponsored protest, there had been clamour from the Manufacturers' Association of Nigeria (MAN) and some faceless trader/ businessmen asking the President, Muhammadu Buhari to show Emefiele the door. Among those vociferous about this campaign is the Chairman, Erisco Foods Limited, Chief Eric Umeofia. An astute businessman I have always admired for his patriotic fervour in heeding the call to produce and patronize commodities we have comparative advantage in order to develop the economy. He started with packaging imported tomato paste, which of course provided jobs for Nigerians; a feat the government is hardly impressed.

However, he recently threatened to close down his factory if his need for $50million was not met by the CBN. He rallied around himself other indigenous manufacturers, the so-called traders, spending huge amount of money and spreading malicious campaigns against the Bank in newspaper advertisements, press conferences and sponsored radio/television programmes, accusing the Bank of sabotaging the federal government programmes on economic diversification.

Recently, Chief Umeofia appeared on a programme on AIT - 'the Morning Ride Show', accusing the CBN of skewed allocation of FOREX in favour of some unnamed Indians and other foreign nationals. He said the current CBN management is running an 'economic abracadabra', and wondered why the Bank should be working against his interest to help Nigerians. He said this as if his financial interest was not his preoccupation. The Erisco helmsman must be commended for relocating his business from Angola and United Arab Emirate to Nigeria to assist in growing the economy and create jobs, but it must be noted that it is not only Erisco Foods Limited that the CBN should open its FOREX vault to. The Dangote Group is also into tomato paste production and never held the nation to ransom or threatened to shut down its factory for lack of access to FOREX.

The CBN, in reaction to Chief Umeofia's public ranting claimed that Erisco Foods Limited had received significant support from its Commercial Agriculture Credit Scheme (CACS) as far as above the stipulated N2 Billion threshold is concerned to support its claim to embark on backward integration, by engaging in primary production. Till date, Erisco cannot fully claim to have complied with what he promised, rather, what he does was packaging tomato concentrates. He is not the only tomato paste businessman in Nigeria, but because he lacked basic understanding of the economics of foreign exchange earnings and the management of foreign reserves; he has ended up de-marketing others, just because of his greed to have the lion share of the FOREX window. The question Nigerians should ask Umeofia is - what did he do with the credit given to him.

Emefiele is just as eager to have a Nigeria that is self-sustaining as Umeofia. He suspended the 41 items from the inter-bank FOREX window to protect the Naira and grow the reserves, but hell was let loose. People called for his head, but people like Umeofia applauded the policy. He sang praises of the governor to high-heavens, but today Emefiele is the villain, just because the nation's situation has become so precarious and the little inflow of FOREX must be judiciously allocated to the most urgent needs of Nigerians, as against the whims of a single greedy man.

Moreover, the 'practical graduate' must understand that the CBN does not allocate FOREX anymore to individuals. That responsibility is with the deposit money banks that bid for FOREX and get what is available according to the priority of the request to the interest of the nation. We may perhaps ask: What is the relationship between Erisco Foods Limited and its bankers, considering the claim that he had applied for $50million for the past 7-8 months and yet could not access FOREX from his bankers.

If Erisco Foods had used the facility it got from the CBN for what it was intended, he would probably today be boasting and be acknowledged as people talk of the Dangote Group for creating jobs for the teeming youths. The CBN has confronted the economy with forward looking policies and interventions, mostly in critical sectors of the economic in order to galvanize the economy.

The CBN governor has not left any stone unturned in supporting government to ensure successful implementation of its policies and programmes. The CBN real sector initiatives, such as the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF), the N200 billion Commercial Agriculture Credit Scheme (CACS), Agricultural Credit Guarantee Scheme Fund (ACGSF), Nigeria Electricity Market Stabilization (NEMSF), Power and Aviation Intervention Fund (PAIF), YEDP, Anchor Borrowers Programme and most recently, NIRSAL to mention a few. So, what has Emefiele done to warrant the 'sack him' campaign by Chief Umeofia or what should he have done better?

In as much as I sympathize with Erisco Foods Limited and other businesses in similar FOREX quagmire, the lesson remain for our local manufacturers to source their raw materials locally in order to achieve backward integration with local agricultural products. This is the only way to help conserve the scarce foreign exchange resource and at the same time ensure optimum employment of domestic labour and other resources. The lies being peddled by likes of Erisco Foods who claim to be indigenous, but feeding fat on scarce FOREX earnings (official and the parallel) to engage in round-tripping activities negates the opportunity given to them by the Bank. He should not turn around to spite his benefactor because of his selfishness and greed.

Threatening to close down and sack his staff if the government fails to arm-twist the CBN into giving him FOREX smacks of frustration from a man who probably is having financial challenges. Indeed, if Nigeria is no longer conducive for Umeofia to do business, he is free to relocate, while the patriotic and genuine ones would stay. Umeofia should borrow a leaf from his brothers in the eastern part of the country, Innoson Motors, who recently got the support of the Chinese to invest $1million in his business. He did not call the Minister of Trade and Industry or Emefiele names because of scarcity of FOREX, but went offshore to seek partnership to grow his business.

But if I may finally ask - does Umeofia wants us to break the FOREX till for him just because he wants to produce tomato paste?

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Steven Rich
Sep 17, 2018:
Well done
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