There are fears of looming massive retrenchment of workers in the country as a member of the Nigerian Economic Summit Group; Babatunde Odunayo has alerted that many companies in Nigeria will begin to shut down over the next four to six weeks.
Speaking in an interview with CNBC Africa, Odunayo stated that many companies planning expansion had borrowed money in dollars, and remain in a very difficult position to pay back with the steadily deteriorating exchange rate of the Naira to the Dollar.
“People committed to expansion projects at 170, 178, and they thought this is profitable, let’s do it, let’s borrow. They borrowed $30 million or 40, 50; the devaluation difference alone can send them packing,” he stated.
While noting that devaluation would be harmful to industry, the CEO of Honeywell Flour Mills said, “But industry thinks government should relax its policies. It’s not the best time to clamp on other sources of dollars.
“If oil was selling at $100 or more, you can say OK, if you don’t do it through the Central Bank, I don’t want to know you, because I don’t even know the source of your money.”
Stressing that government policies mandate that if any company must use dollars outside the CBN, it must show it to CBN as an inflow, he asked: “How many companies in Nigeria earn foreign currency as an inflow into a dom account?”
Odunayo then asserted that industry has “four weeks, maybe six weeks” before “significant closure and loss of employment,” arguing that it was an error on the part of the CBN to explicitly announce that it would no longer fund bureau de change operators.
“That sent the naira rate packing. You don’t need to go and make such announcement. They can go tomorrow and say; ‘now we shall begin to sell some limited amount to bureau de change’. Whether you give $50,000 or $10,000, the fact is that you’re selling something.
“It would reduce the pressure, the reduction in pressure is not commensurate to what you give; it’s the relax atmosphere that makes the naira go down,” he opined, pointing out that this was not the best time for anyone to be president of Nigeria.
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