Manufacturers kick as banks expand forex restriction list

Local manufacturers are just beginning to understand the full import of the list of 41-items declared not valid for foreign exchange by the Central Bank of Nigeria as commercial banks have expanded the categories to include more items than originally specified.

Drug manufacturers have raised concerns that banks are rejecting application forms for foreign exchange in respect of containers for bottling of baby drugs, eye drops, infusion bags, laboratory vials and glass cylinders.

They (banks) claim these materials fall within the categories of items (glass/glass ware, plastic and steel), declared not valid for forex by the CBN.

According to the National Treasurer of the Chemical and Pharmaceutical subsector of the Manufacturers Association of Nigeria, Mr. Biola Adebayo, the banks are taking advantage of the fact that the list is rather ambiguous and the items not clearly defined.

He said, “Right now, we have a high level of confusion out there. There is a lot of ambiguity in the way the list was composed and some banks are now taking advantage of that.

“Most of these items are inputs that we use for manufacturing essential medicine in Nigeria for our people and when you ask us to go to the parallel market to source for forex at the rate of N242, it simply shows that our input is going to be highly expensive.

He continued, “The banks added an item called propylene granule, which is used to make containers for Intravenous infusion fluid.

“You know every patient that is hospitalised has one form of infusion or the other and this is a major component of that product, the rest is water.

“If you are making the major component more expensive, the sick person will buy at a very expensive rate and if I continue to manufacture like that, consumer resistance will set in and the consumer will not be able to afford the product at all.”

Adebayo, who is also the Operations Director of Fidson Pharmaceuticals, added that some of the bottles used to manufacture baby drugs could not be sourced locally.

He said, “Another ambiguity created by the list is in a broad category called glass and glassware. I have some important medicine in glass bottles and certain critical, very delicate plastic containers. They are eye drops, baby drops and drugs for the aged. Most of these bottles are 20 milliliters, at most 30ml.

“Nobody is manufacturing these bottles in Nigeria. We have only two glass manufacturing facilities in Nigeria, Beta Glass in Agbara and International Glass in Aba. They only manufacture beer bottles, 100ml and 60ml for breweries who buy large quantities.

 The same thing applies to stainless steel. We use high grade stainless steel, otherwise the steel will react to the content we put inside.”

Coming on the heels of the newly implemented Economic Community of West African States Common External Tariff, which specifies zero import tariff for finished drugs and 20 to 25 per cent tariff for raw materials for the pharmaceutical industry, the manufacturers have said the situation will discourage local investment that the government is trying to encourage.

This, they said, could force a lot of manufacturers to close factories and turn to importation, which had been rendered easy by the zero per cent duty on imported finished drugs.

Adebayo said,”

 Nigeria will become a dumping ground for foreign drugs and if we keep depending on foreign countries to supply our drugs, what happens when they shut their doors to us like India and China did when they shut Africa out of access to Human Immunodeficiency Virus drugs in the past?

“It was only when we were able to manufacture the HIV drug locally that the drugs became cheap so much so that government is now giving them to patients free.”

On his part, the Chief Executive Officer of SKG Pharma and Chairman of PMGMAN, Mr. Okey Akpa, appreciated the spirit behind the list and commended the efforts of the CBN in its determination to encourage local manufacturing.

He, however, noted that since some of the input for local manufacturing were not available locally, asking manufacturers to source for foreign exchange from the parallel market for their importation would lead to closure of factories and job losses.

He called for a review of the list, urging the apex bank to work with manufacturers to fashion out a comprehensive list of specific items that would be used for local manufacturing. “We are also sending them a list and we urge them to look at it and make exemptions,” he said.

The Lagos Chamber of Commerce and Industry and the Manufacturers Association of Nigeria had earlier expressed worry about the broad nature of the CBN list of 41 items.

They had also called for a review with the President of the LCCI, Mr. Remi Bello and the MAN President, Mr. Frank Jacobs, both calling for a well defined list that would take the local manufacturing industry into consideration.