By Emeka Okoroanyanwu and Babajide Okeowo
Nigerians were jolted last week when President Muhammadu Buhari at his country home in Daura, Katsina State, directed the Central Bank of Nigeria not to provide foreign exchange to importers of food items and products into the country.
Buhari gave the directive when he hosted All Progressives Congress (APC) governors to the 2019 Eid-el-Kabir lunch at his country home.
He said; “Don’t give a cent to anybody to import food into the country.”
The president noted that some states like Kebbi, Ogun, Lagos, Jigawa, Ebonyi and Kano had taken advantage of the Federal Government’s policy on agriculture with huge returns in rice farming. He, therefore, urged more states to plug into the ongoing revolution to feed the nation. “We have achieved food security, and for physical security, we are not doing badly.’’
The president further revealed that the directive was to achieve steady improvement in agricultural production, and attainment of full food security while ensuring that the country’s foreign reserve will be used strictly for diversification of the economy and not for encouraging more dependence on foreign food.
The president’s directive came few months after the former Minister of Agriculture, Audu Ogbe, complained that Nigeria was spending about $22 billion annually on food importation, saying that the government would do something to reverse the trend.
The directive has, however, unsettled some Nigerians, who believe that the president’s directive was not well thought out and premature. Some stakeholders in the agricultural sector are of the view that while the directive is a much-needed one, others called for caution, saying there is still a lot to be done in the agricultural sector if the directive is to yield the desired result.
One of those that quickly reacted to the president’s directive was the Nigeria Employers’ Consultative Association (NECA). According to NECA, the umbrella body of employers in the country, the directive by President Buhari to CBN to withdraw FX for the importation of food was a laudable initiative, but he noted that the timing was wrong.
Director-General of NECA, Timothy Olawale, said though the recent thrust towards the withdrawal of Forex for imported foods is laudable and welcome, the timing, however, called for concern.
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He noted that at present the country lacks the capacity for sufficient food production to meet local demand. The NECA boss noted that a wholesale immediate withdrawal of FX without giving a buffer period for businesses to adjust and source for alternatives would only breathe life to the unresolved monstrous smuggling activities, with serious consequences for the economy.
He observed that with the recently signed AfCFTA, Nigeria would further create a thriving market for other countries and remains a dumping ground for imported goods.
According to him, “the argument of conserving foreign exchange through the withdrawal or ban of FX for food importation is not tenable.
“If we are desirous of conserving foreign exchange, government will do well to stop the allocation of FX for the importation of petroleum products, ban medical tourism to aid investment in Nigerian hospitals, withdraw FX for payment of tuition in foreign universities to enable the resuscitation of the perpetually under-funded Nigerian universities amongst others. The reality of lack of capacity to embrace these other wholesome reforms is true of the situation with insufficient capacity presently for food production,” he said.
Olawale urged that “rather than a blanket knee-jack withdrawal of FX on food importation and indeed milk importation, as announced by the government, a gradual withdrawal with a buffer period of not less than five years should be given.
This, he said, would ensure the proper and strategic implementation of government’s ‘Agricultural Promotion Policy’ that was established less than five years ago.
It would also enable government resolve the myriads of challenges facing the food production value chain such as the terrible distribution system for fresh foods, post-harvest losses due to lack of storage system and the security challenges and confrontation between farmers and herdsmen.
Directive brings encouragement, concern – Stakeholder
A key stakeholder in the agricultural sector in the country, Mr. Emmanuel Ijewere, Chairman of Best Food Farms, expressed mixed feelings towards the directive.
He said, “I am very happy about that statement, for us in the agricultural space, we are very happy; it encourages us, and at the same time gives us huge concern. This kind of directive has the potential of creating avenue for more smuggling to thrive, unless the Nigeria Customs Service, NCS, who is saddled with the responsibility of curbing this menace of smuggling is either revamped or completely re-organised. This will be a very dangerous thing for Nigeria because those who will benefit from this directives are the smugglers.
“Our borders are very porous and they have very strong representation at the borders and the government seems not to be doing much about that. Having said that, if that is done in consonance with this policy, even if it is a statement that was made, it is a statement that the CBN cannot ignore, he has given a direction as to where the country should be going and I agree with him on the move to encourage the growth of the agricultural sector,” he said.
Ijewere said though the country has made some progress in attaining food security, it is not where it should be and urged Nigerians to be ready to make short-term sacrifice for long-term gains.
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In his words, “Unless we have the courage to bite the bullet, to let us say let us suffer in the short term in order to have a long term gain in terms of food stability, there is this mentality that we have so much FX to spend when it comes to food importation, now we have come to the realization that foreign exchange is beginning to disappear. While we have moved a bit in attaining food security, we have not moved as fast as we should have moved given the rise in population growth.
“We have taken three steps forward, and a step backward, this is the kind of situation that we are facing. Therefore, we need to have some things in place. You cannot come up with a policy, plan or idea without looking at other areas, it is not enough to make policies, you must be ready to back it up with the required tools to make the policy work” he added.
Directive, in the economic interest of Nigeria, Nigerians – NACCIMA
For the President of the Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA), Hajia Saratu Aliyu, the president’s pronouncement was in the right direction and the economic interest of Nigeria.
She was happy that the aggressive efforts by both the Federal Government and the Association to young Nigerians to go into farming business is beginning to yield positive results given the increase in agricultural production in the country. When viewed against this backdrop, she said it would not be proper for the country to begin to import the same products into the country, adding that only those food items we do not currently produce should be imported.
She said what government can do now is to provide the necessary environment for the local farmers to enable them to put more efforts, adding that NACCIMA has been making an effort to encourage and sensitize local farmers. She commended the Federal Government and CBN for the policy initiative to protect local farmers and the economy.
Government needs to be specific – MAN, LCCI
On his part, the Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadiri, shared the same view with the NACCIMA president, saying that the government needed to be specific, especially regarding the items that need to be prohibited.
“For instance, there are food items that are required as raw material, are they also banned?” he queried, adding that the CBN should seek more clarifications from the president.
According to Ajayi-Kadiri, the objectives behind President Buhari’s pronouncement is to conserve the foreign exchange spent on the importation of food into the country, saying anything done to protect the local economy is in the right direction. He urged the government to implement the policy in a manner that should be beneficial to the country, bearing in mind the lack of complementarity among African products.
In his reaction, the Director-General of Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, said the president made a general statement, as he did not specify the agricultural imports that should be prohibited.
“What food items is he talking about? He should be specific on the food items he is talking about,” he declared.
According to Yusuf, items are already in the Exclusive List with the CBN. The president should list the food items he wants to be banned. Besides, the LCCI Director-General said the president’s statement has implications for the nation’s monetary policy, which is the responsibility of the Central Bank of Nigeria.
The CBN is an autonomous institution with the responsibility for the country’s monetary policy, hence, the President should not be giving directives to the apex bank.
“It is not good for the nation’s monetary policy; we should not worsen the existing instabilities and uncertainties in the economy,” he said, adding that the statement is not good for investment, job creation and private sector capitals.
He said for the good of the country, policies should be studied carefully before they are implemented, adding “we need to be careful in order not to scare investors including the existing investors.”
Allow market forces to make directive attainable –Rewane
Similarly, economic analyst and the Chief Executive Officer, CEO, of Financial Derivatives, Bismarck Rewane, called on the Federal Government to tread carefully with the directive and allow market forces to dictate the pace.
“While we might be making a gradual process in attaining food sufficiency, we should not be carried away, market forces can make this policy more attainable than putting in prohibitions and restrictions. Imported food items will no longer be available for the official foreign exchange list. This means you will have to buy the money in the parallel market and induce the custom officers, so basically what you are going to create is the smugglers’ paradise” he said.
He also expressed worries that previous bans have failed to yield the desired result.
“What has happened since we banned the importation of rice? The importation of rice has dropped but correspondingly, the importation of rice into the Benin Republic and Togo has increased. So, these regulations helped in a certain respect but at other times it ends up like playing with mirrors. The food-producing states will latch onto this and say that we need monetary policy support from the Central Bank, Intervention, Anchors Borrowers, additional support, customs to protect, among many other demands,” he said.
Directive, a result of weak institutions –Moghalu
Meanwhile, Kingsley Mogahalu, former CBN deputy governor, said the directive is against the independence of the CBN.
“The issue here isn’t whether or not CBN should allow access to forex for food imports. It is about whether such an economic policy of a central bank should be imposed by a political authority. A major reason for our poverty, instability and weak economy is weak institutions,” he said.
Recall that in 2015, the CBN announced that it had banned forex for the importation of 41 items saying the move would conserve scarce forex and encourage local production.
Some of the food items banned at the time were: Rice, Margarine, Palm kernel/Palm oil products/vegetable oils, meat and processed meat products, Vegetables and processed vegetable products, Poultry chicken, eggs, turkey, Tinned fish in sauce (Geisha)/Sardines and Tomatoes/tomato pastes
In December 2018, fertilizer was added to the list bringing the total banned items to 42. At the last meeting of its monetary policy committee, Godwin Emefiele, the CBN governor, announced the bank’s plans to restrict forex for milk importation.