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‘CBN’s directive on Forms M will dampen economic growth’

The recent directive by the Central Bank of Nigeria (CBN) to all authorised dealers on Forms “M” has the potential to frustrate the on-going efforts of the Federal Government to return the economy to growth, Organised Private Sector (OPS), has warned.
It also warned that the directive has potential to an economic downturn already being facilitated by the COVID-19 pandemic, while blanket ban on centralised procurement would have significant negative impact on businesses and economy.
In a letter addressed to The Governor of CBN, Godwin Emefiele, and obtained by The Guardian, OPS, under the aegis of Nigeria Employers’ Consultative Association (NECA), commended the Federal Government on various policies aimed at ensuring growth and development of the economy.
However, it said it was imperative to note the downside of the new policy, which has the potential to take the already struggling economy more steps backwards.
According to the CBN, the policy was intended to ensure prudent use of Nigeria’s foreign exchange resources and eliminate incidences of over-invoicing, transfer pricing, double handling charges, and avoidable costs that are ultimately passed to the average Nigerian consumer. 
But NECA in the letter signed by the Director-General, Timothy Olawale, maintained that the directive would be a setback majorly to manufacturing companies, who are at risk of business disruption, pose challenges to immediate access to final supplier companies. It also has potential to worsen the impact of COVID-19 pandemic on the real sector, as well as necessary government crackdown on abuse of procurement.     
NECA noted that notwithstanding the government’s urgent need in the globally challenged economic climate to eliminate any abuses of foreign exchange reserves, adding that an all-encompassing or blanket ban on centralised procurement would have a significant negative impact on businesses and the economy.The group called for a system to monitor, identify and penalise abusers of foreign exchange mechanisms.
The Association appealed to the CBN to convene a stakeholder engagement session with NECA and chief executives of member-companies who are impacted, to achieve a moratorium that would enable them to build relationships with the final suppliers and original equipment manufacturers over the period of moratorium.
“At NECA, we are committed to collaborating with the CBN in any way practicable, to ensure this objective is fully met without jeopardizing business continuity for member-companies.
“ We respectfully seek an audience with your office to further engage on this matter in the interest of finding a solution that will not negatively impact businesses or the economy,” the letter read.
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