Things are set to get messier, economic-wise, for thousands of Nigerians as they face the possibility of losing their jobs as most companies set wind down, Mr. Babatunde Odunayo, pioneer CEO of Honeywell Flour Mills, has revealed.
Odunayo in an interview with CNBC Africa, said many companies in Nigeria will begin to shut down over the next four to six weeks, warning that devaluation of the naira would be harmful to industry.
He said many companies planning expansion had borrowed money in dollars, and remain in a very difficult position to pay back.
“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 said.
Odunayo, a member of the Nigerian Economic Summit group and chairman, board of directors at FBN Mortgage, stressed; “So industry does not support devaluation. 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.
“How many companies in Nigeria earn foreign currency as an inflow into a dom account?” he queried, adding that industry has “four weeks, maybe six weeks” before “significant closure and loss of employment”.
Odunayo added 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.”