Not all manufacturing companies have received payment for their unpaid foreign exchange forward contracts. These companies’ unsettled FX backlogs have continued to incur losses too big to bear, the Manufacturers Association of Nigeria has said.

MAN’s advocacy comes despite the Central Bank of Nigeria’s declaration that it had concluded the settlement of all valid backlogs.

In an interview with The PUNCH, the Director-General of MAN, Segun Ajayi-Kadir, confirmed that some manufacturers with legitimate claims were excluded from the CBN’s final settlement notice and could not absorb the resulting losses.

He argued that manufacturers were the least able to bear the financial burden arising from the unresolved foreign exchange forward contracts.

Ajayi-Kadir said, “Industry-wise, we have the least capacity to cope with the damage that will be done. So why are we the ones who are carrying the can? That’s the point. So many people have lost billions of naira.”

He added, “And the banks can absorb it; the CBN can absorb it, but we cannot. And we are the least responsible for what has happened.”

MAN’s DG said the association was engaging the apex bank and the Federal Government to revisit the outstanding cases involving manufacturers whose forex forwards remained unpaid.

Ajayi-Kadir said, “The CBN indicated that the exercise was concluded. But we know that some of our member companies are deserving of having their settlement. We are continuing our conversation by appealing to the CBN to revisit the issue. Because we have conviction that some of our members who have been impacted are deserving.”

The CBN had announced on 20 March 2024 that it had successfully settled all outstanding and valid foreign exchange forward obligations, fulfilling a pledge by its governor, Olayemi Cardoso, to clear about $7bn in inherited forex backlogs. The apex bank said it engaged Deloitte Consulting to audit the claims, adding that about $2.4bn worth of transactions were deemed unverified or invalid and excluded from the settlement.

However, MAN insisted that some manufacturers caught in the excluded category had complied fully with the prevailing guidelines at the time the contracts were executed.

Ajayi-Kadir said, “Their case is deserving of a review to allow them to get paid… Because, I mean, it’s a long-drawn-out thing. They have produced, they have sold, they have accounts audited, and they have taxes paid. And they continue to pay interest on the foreign and local loans that they took in respect of that transaction.

“And they followed the guidelines that were necessary at that time to be done. So, you cannot understand why that cannot be. So, what we are doing is we are engaging the government,” he added.

MAN’s DG acknowledged that some manufacturers had received their payments but stressed that “it’s those manufacturers that didn’t get their money that we worry about.”

He affirmed that some affected firms had resorted to legal action, a development he said could hurt the country’s image. “Yes, many people are choosing to settle it in court. We are hoping that we don’t have to get to that, because it can affect the image of the government,” Ajayi-Kadir remarked.

MAN’s DG maintained that the contracts in question were entered into legally under existing regulations. “You can imagine if there’s a regulation now, and you go ahead to operate as stipulated by that regulation, and one year down the line somebody is saying that you are wrong to have operated by that regulation.”

He added, “Everything that was done was legal and was straight, and there is no evidence that anybody cheated.”

He said the association would continue to press the government to reconsider the excluded cases. “Those companies that have that kind of condition that we are advocating for. I will continue to engage the government with the belief that they will reconsider,” Ajayi-Kadir insisted.

The PUNCH had earlier reported that MAN cited the case of steel manufacturer KAM Industries Nigeria Limited, which became embroiled in a forex forward-related dispute with a commercial bank, describing it as one of several “harrowing experiences” faced by manufacturers.

MAN had also warned that the unresolved $2.4bn worth of forex forward contracts from the backlog risked plunging the manufacturing sector into crisis, noting that many firms borrowed heavily to open letters of credit based on the CBN’s forward allocations and were now burdened by high interest costs and mounting losses.