After months of navigating Nigeria’s volatile exchange rate regime and battling soaring production costs, manufacturers in the country now face a fresh crisis—one that threatens to paralyze operations across the sector.
The Manufacturers Association of Nigeria (MAN) is raising the alarm over what it describes as the unfair targeting of its members by commercial banks, many of whom have frozen corporate and personal accounts over unresolved foreign exchange (Forex) forward contracts—agreements made between the banks and the Central Bank of Nigeria (CBN) to supply foreign currency at a future date.
Accounts Frozen, Operations Grounded
At the center of the dispute is the handling of Forex forward contracts that were previously arranged between commercial banks and the CBN. As part of standard practice, manufacturers pay their banks in naira—either through direct payments or credit facilities. The banks, in turn, remit the funds to the CBN, which assumes responsibility for providing the dollar equivalent at an agreed future date.
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However, as dollar shortages worsened and the CBN struggled to meet its forward obligations, many dating back to the previous administration, commercial banks began turning the heat on their customers. Manufacturers who had already fulfilled their naira commitments now face legal actions, asset freezes, and in some cases, harassment by bank compliance teams.
“We call on the Central Bank of Nigeria to direct the concerned commercial banks to immediately unfreeze the accounts of innocent manufacturers in relation to the vexed issue of forex forwards,” MAN said in a statement issued on Thursday and signed by the Association’s Director General, Segun Ajayi-Kadir.
“Given this background, MAN asserts that its members are not liable for delays or complications arising after the remittance of funds to the CBN by commercial banks,” the statement stressed.
One of the most high-profile cases involves KAM Industries Nigeria Limited, a key player in the steel sector. Its accounts were reportedly frozen over an unresolved forward contract dispute. Ajayi-Kadir said this is only the reported case, there are many others suffering in silence.
“This rather unfortunate treatment of private business is only the reported one, and there are several others undergoing similar harrowing experiences. This should stop in the interest of economic development of Nigeria, job security, and business sustainability,” he said.
The manufacturing sector is particularly vulnerable. Over 80 percent of industrial inputs in Nigeria are imported. From raw materials to critical machinery, nearly every aspect of production is tied to access to foreign currency.
Indeed, the crisis touches on deeper systemic issues in Nigeria’s foreign exchange management. In August 2024, MAN petitioned the CBN for over $2.4 billion in unsettled forward claims. The apex bank admitted it could not honor all of them, attributing delays to an ongoing EFCC investigation into the authenticity of some transactions.
However, the CBN claimed to have cleared $7 billion in “valid” backlogs as part of President Bola Tinubu’s broader economic reforms, which include unifying the country’s multiple exchange rates and attracting foreign capital.
“Recent developments have shown a troubling trend in the way banks are handling the matter, to the extreme detriment of manufacturing industries, who have the needless misfortune of being at the receiving end of a problem they didn’t create and shouldn’t suffer,” Ajayi-Kadir said.
‘Manufacturers Should Not Be the Scapegoats’
Ajayi-Kadir emphasized that punishing manufacturers—who were only trying to navigate Nigeria’s deeply flawed Forex market—would sabotage the very sector responsible for job creation and economic diversification.
“Our members should not be harassed by the banks. The banks should show understanding and be supportive as we all seek a solution to this rather unfortunate and unexpected impasse. As the innocent one and quite evidently the weakest and most vulnerable in the tripod, it is unconscionable that manufacturers are bearing the brunt,” he added.
He warned that continued account freezes and regulatory pressures could lead to shutdowns, layoffs, and worse—capital flight by investors who no longer trust the system.
MAN said it was open to dialogue and willing to mediate between affected manufacturers and the banks to find an amicable solution.
What This Means for Nigeria’s Economy
The timing could not be worse. Nigeria is still grappling with inflation, power outages, and a wave of multinational exits from the country due to worsening business conditions. The government’s hopes of a local manufacturing renaissance—one that reduces import dependence and stimulates exports—appear increasingly fragile.
The Forex forward crisis is now testing not just the resilience of manufacturers, but also the credibility of President Tinubu’s economic reforms. If businesses that followed due process are now being punished retroactively, analysts warn, the reforms may lose legitimacy.