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Forex restrictions: Ghanaian timber exporters at risk of losing N6bn

By Favour Nnabugwu  with agency report

The restriction by the Central Bank of Nigeria (CBN) on the sale of hard currency to importers of some 41 items seem to have taken toll on neighbouring countries’ markets as Ghanaian timber exporters risk losing N6billion ($30million)    as a result of the restriction. Among the affected Nigerian importers are those that deal in timber products from Ghana which annually imports N6bn ($30m) worth of timber products.

naira sign
File: Naira sign

The Chief Executive Officer of Ghana Timber Millers Organisation (GTMO), Dr. Kwame Asamoah, in an interview in Ghana, stated that the Nigerian central bank’s decision could impact negatively on the fortunes of an already ailing timber industry in Ghana

This, he said, is as a result of the fact that Nigeria is the main destination of plywood and wooden doors from Ghana within the ECOWAS and African Timber market, importing about 25 percent of Ghana’s wood exports. Records of Ghana’s export of timber and wood between 2014 and 2015 showed a significant drop in volume and value, painting a gloomy future for the country’s timber industry.

For instance, the volume of timber and wood products exported to Nigeria from January to June 2014 stood at 19,251.458 m³ whereas the figure for January to June 2015 is given as 9,904.665m³, representing 45.88 percent decrease. Asamoah said the best product that can be processed out of the type of timber species available in the country is plywood, the bulk of which goes to the Nigerian market; and that many jobs are on the line should the timber firms fold-up because of shrinking access to the Nigerian market.

He said already the number of buyers from Nigeria has reduced significantly, and fears that the situation will further worsen if government does not intervene immediately to address the issue. He said this development is completely beyond the industry and therefore appealed for government to act without delay. Per the Nigerian Authority’s new regulation, dealers in timber importers are barred from going to the foreign exchange market for hard currency to procure products – leaving the more expensive black market as their only option.

The central bank of Nigeria (CBN) took the decision as part of measures to contain its fast-depleting external reserves, which some analysts attributed to capital flight, and has blocked the sale of hard currency to importers of wood particle and board, wood fibre board and panels, plywood board and panels, wooden doors, textiles, cold-rolled steel sheets, galvanised steel, roofing sheets, cement, rice, margarine, palm kernel, vegetable oil, poultry products (chicken and turkey), roofing sheets, steel drums, steel pipes, wire mesh, steel nails, and among others.

The CBN had in a circular issued on June 23, 2015, said that the implementation of the policy is expected to help conserve foreign reserves and facilitate the resuscitation of domestic industries as well as generate employment. The circular, which was signed by the Director, Trade and Exchange, CBN, Olakanmi Gbadamosi, noted that it had become necessary to exclude importers of some goods and services from accessing foreign exchange on the Nigerian foreign exchange market in order to encourage local production of the items.

Part of the circular said: “In the continuing efforts to sustain stability of the forex market and ensure efficient utilisation of forex and derivation of optimum benefits from goods and services imported into the country, it has become imperative to exclude importers of some goods and services from accessing foreign exchange on the Nigerian forex markets in order to encourage local production of these items.

“Importers of the listed items who wish to continue their import activities have been told to do so using their own funds without recourse to the Nigerian foreign exchange market.” This, some stakeholders have said, will increase the cost of importing wood products from Ghana; and as a result may cause the country to lose the Nigerian market to China and other foreign countries that have means of selling directly to the Nigerian consumer market without having to go through a dealer.

However, the action of the Nigerian government is said to contravene ECOWAS’s Trade Liberalisation Scheme (ETLS) that seeks to promote regional integration by encouraging free trade among member-countries through eliminating both tariff and non-tariff restrictions. The implication for the Ghanaian economy is that the situation could further sink any hope of reviving the once-vibrant timber industry, as companies may be forced to downsize their labour-force to sustain their business.

Board and plywood manufacturing, which is presently the timber industry’s backbone, employs about 80% of the current 35,000 workers in the country’s timber industry. These companies also earn 90 percent of the US$120 to US$200million annual foreign exchange.


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