Extortion: Krisora Group MD tasks FG on prompt payment of security agents

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    …says political, environmental factors hindering business growth

     

    The Managing Director/ Chief Executive Officer of Krisoral, Igwe Chris Oranu Chidume, Eze Ana-Ukwu has urged the federal government to ensure adequate payment of security agents in order to reduce the level of extortion from Nigerian manufactures.

     

    This is even as he noted that the roadblocks on Nigerian roads, especially on roads leading to the eastern parts of the country is time-consuming and means of extorting monies from manufacturers who are barely surviving on their own following the present forex scarcity facing manufacturers.

     

    He also noted that manufacturers in the eastern states are currently contending with environmental factors, social factors, and political factors targeting established businesses in the east.

     

    Speaking recently in Lagos at the Commerce and Industry Correspondents Association of Nigeria, CICAN, 2021 workshop/ Media Awards, Media Awards themed: ‘Impact of Forex Crisis on the Real Sector and MSMEs’ Eze Ana-Ukwu said “for you to survive in our environment, you will have to consider all these factors.

     

    He said, “Coming to how we survive forex crisis, is about being prudent, it is about bringing our financial knowledge to bear which still goes down to identification of values once you see them. You set your eyes on value and identify it and give it life, manifest it, save it, and do not squander it. Conserve it.

     

    “The forex market in Nigeria is characterized with different rates from open markets and the disparity is so obvious that some people now see it as a business of getting the money from the Apex bank and reselling to others.

     

    “More so, time is consumed and for them to collect this money they have to block the road and if they leave the road free they will not be able to extort this money from you. To be able to extort, they will cause gridlock and many at times the gridlocks you find in our environment are all artificial because that is the only way to be able to collect the intended extortion.

     

    “But if the government give them whatever they are getting by blocking the road and causing truck business drivers to pay for it instead of blocking the road, cause gridlock and at the same time we are competing with the same market where somebody somewhere who has access to all infrastructure is coming from, to me it does not make any sense, so that is going to be my line of thoughts,” he maintained.

     

    Also speaking at the event, Chief Executive Officer, Centre for the Promotion of Private Enterprise, CPPE, Muda Yusuf called for the adoption of a flexible exchange rate policy regime, saying it will reduce uncertainties and inspire confidence of investors.

     

    He said a flexible exchange rate will enhance liquidity in the foreign exchange market, adding that it is more transparent as a mechanism for forex allocation, minimizes discretion in the allocation of forex, and reduces opportunities for round-tripping and other sharp practices.

     

    “My proposition is that we should adopt a flexible exchange rate policy regime.  Let me clarify that this is not a devaluation proposition. Rather is it is a pricing mechanism that reflects the demand and supply fundamentals in the foreign exchange market”, he noted.

     

    “It is a model that is sustainable, predictable, and transparent.  It is a policy regime that would reduce uncertainty and inspire the confidence of investors.  It is a policy framework that would minimize discretion and arbitrage in the foreign exchange allocation mechanism”, he maintained.

     

    “In order to promote better theoretical understanding, it would be useful to define these concepts.  Devaluation is a policy choice often adopted to boost export and discourage imports.  Countries adopt this measure, not necessarily because they have a foreign exchange or balance of payment crisis; but as deliberate trade policy strategy to make their exports cheaper,” he stressed.

     

    Speaking further, the former Lagos Chamber of Commerce and Industry, LCCI, Director-General maintained that a flexible exchange rate regime on the other hand is adopted to cope with changing demand and supply conditions in the forex market.

     

    He noted that a fixed exchange rate regime creates a widening gap between the official and parallel market exchange rates, collapse of liquidity in the foreign exchange market resulting in acute scarcity, mounting trade debts, and increasing factory closure as many manufacturers are not able to access foreign exchange for raw materials and other inputs.

     

    Managing Director of NISPO, Afam Mallinson Ukatu while speaking, appealed to the federal government to make an investment-friendly monetary policy in order to prevent the total collapse of industries in Nigeria.

     

    He said the manufacturing and steel industry is facing lots of problems, regarding accessibility to foreign exchange to buy raw materials and also the spare parts.

     

    According to him, these two important things are what keep manufacturing going or manufacturing work.

     

    “If you are not able to have access to forex, in order to buy those items, you are collapsing the factory. The Central Bank of Nigeria (CBN) hasn’t done much in this area. Manufacturers Association of Nigeria (MAN) has been advocating that the CBN should create a window that can help genuine manufacturers access forex with ease but to no avail.

     

    “We are appealing to the government to make an investment-friendly monetary policy to prevent the total collapse of industries. It is becoming so obvious that it has affected so many industries, basically because of the high exchange rates of which some have to go out of the way to buy from the parallel market to continue in production.

     

    “Moreover, If you have a loan running with the commercial banks, and Bank of Industry (BoI) for example, there is no way you will allow your factory to shut down because you must service the loan facility, so you have to find a way or the other to get your spare parts and raw materials. But when you are not getting forex from CBN windows, definitely, you have increased your cost of production by 25per cent – 30per cent,” he said.

     

    Speaking further, Ukatu said that there is a need for the government to do something to help finance raw materials and spare parts.

     

    “Furthermore, we have been advocating for a means of unification of gas prices, in terms of paying in local currency, or pegging it at a fixed rate because it is meant to be for manufacturers. Anytime manufacturers are getting gas at a fixed rate of ₦400 per Dollar, for instance, we can plan with it, but as of today, with the devaluation of Naira and with the dollar continuously going up, the rate of gas has increased and the Manufacturers are at the receiving end.

     

    “There is a need for a survey to find out how genuine manufacturers are paying for gas and to compare it to what other people are paying. There is the need to have a level playing field; otherwise Nigerian manufacturers would be worse off,” he added.

     

    On the issue of variation in taxes and multiple taxes, Utaka maintained that the government should understand that these manufacturers have done the investment by themselves, build the road themselves, generate power themselves, yet the government wants us to pay all forms of taxes.

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