The directive by President Muhammadu Buhari that the Central Bank of Nigeria (CBN) should not sale foreign exchange (Forex) to food importers has attracted varied reactions from stakeholders. While some people believe that the order will help Nigeria become self-sufficient in food production, others insist that it will further make it difficult for Nigerians to afford stable food. For foreign investors, the order is an affront on CBN’s independence and is capable of hurting foreign capital inflows, write NDUKA CHIEJINA, COLLINS NWEZE and DANIEL ESSIET.
NOT many people saw it coming. And when President Muhammadu Buhari directed the Central Bank of Nigeria (CBN) not to sell foreign exchange (forex) to food importers, it took many stakeholders by surprise.
President Buhari said he asked the CBN to stop providing foreign exchange for food importation.
In a statement issued on Tuesday by Garba Shehu, presidential spokesman, the president said the directive is to ensure the steady improvement in agricultural production and attainment of full food security.
The president, who hosted All Progressives Congress (APC) governors to eid-el-Kabir lunch at his country home in Daura, said the foreign reserve will be conserved and used for the diversification of the economy, and not for encouraging more dependence on foreign food import bills.
“Don’t give a cent to anybody to import food into the country,’’ he said.
The president said some states like Kebbi, Ogun, Lagos, Jigawa, Ebonyi and Kano had already taken advantage of the federal government’s policy on agriculture with huge returns in rice farming, urging 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,’’ he said.
Buhari said he was delighted that young Nigerians, including graduates, have started exploring agriculture-business and entrepreneurship, with many posting testimonies of good returns on their investments.
But the order has attracted several reactions from farmers, industrialists, economists and financial pundits. But while many of the speakers said the directive will resurrect Nigeria’s long-time dream of being sold-sufficient in food production, others believed that it will make access to stable food elusive to the common man on the streets.
But a larger group of people with interest in foreign direct investment said the President’s directive was an affront on the independence of the CBN, as is the practice across the world where the central banks are expected to operate without government interference.
Former Executive Director, Keystone Bank, Richard Obire, also said the President’s directive will help grow the agriculture sector. He said there is need to also provide the infrastructure needed to move food from where they are produced to where they are needed. ” It is not enough to produce food. You need to also have the infrastructure to move the foods to areas of need. I also believe that the forex that would have been used for food import will now go to education, and health sector,” he said.
Continuing, Obire said: “With the President directing the CBN to stop giving a cent of forex for food imports, investors and businesses will be increasingly concerned about the independence of the country’s central bank. These concerns were already there with the multiple exchange rates regime seen to be driven by the Government. This new directive will heighten those concerns”.
Director-General, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, said there was a need to get more details and clarifications on what exactly constitutes food items in the context of the Presidential directive.
“The Harmonised System codes of the items affected need to be indicated. It is hoped that these details would be made available in subsequent releases by the CBN. This is essential for proper analysis of the possible impact on investment, the welfare of citizens and the economy. Meanwhile, the CBN before now had placed many food items on the forex exclusion list. It will be interesting to see what additional food items are being contemplated as additions to the list. In all of these, we need to worry about the implications of policy pronouncements for investors’ confidence and the general sentiments of investors,” he said.
Yusuf said unemployment levels in the country has reached a disturbing level of over 23 per cent and rising. “Youth unemployment is even much more. Yet the panacea for dealing with the scourge of unemployment and poverty is an investment. If policy and regulatory risks continue to escalate as we are currently experiencing, the chances of stimulating investment, whether domestic or foreign, would remain dim. Current forex policy conceptualisation and management are adversely impacting investment,” he said.
He said it was critical to scale up stakeholder engagement on the strategies for economic diversification and self-reliance.
He said rigorous impact study should precede major policy changes, supported by empirical data. This is necessary to minimize shocks and dislocations in the investment environment. This is also imperative to stem the increasing cases of job losses.
“Over the last couple of years, food inflation had been a source of worry. It has consistently been ahead of core inflation. This is a reflection of the productivity challenges in the agricultural sector which has lately been complicated by security challenges across the country and attacks on farming communities. The sector is still largely dependent on smallholder farmers, with little mechanisation and application of technology. Transportation is another key impediment to food security in the country. These are fundamental issues that need to be addressed, and urgently too,” he added.
Former President, Chartered Institute of Bankers of Nigeria (CIBN) Mazi Okechukwu Unegbu, said the president’s pronouncement was in order. He, however, added that there was the need for him to take into consideration, Nigeria’s peculiar environment before making such pronouncement. “Are Nigerians feeding well and producing enough at the moment. What is the gestation period for the policy implementation?”.
He said the President’s pronouncement is not bad, provided there is enough time for farmers to produce the right quantity of food for the population.
Chairman, Rice Farmers Association, Kebbi State, Alhaji Muhammad Sahabi Augie, said President Buhari asking the CBN to stop providing forex for the importation of food into the country was a welcome development.
For instance, in Kebbi State, he said the Government‘s ban on rice importation which occasioned increased local rice production led to the fall in the price of paddy.
He said the volume of rice harvested from different farm locations in the state was unprecedented under the Anchor Borrower’s dry season rice farming programme.
He said the harvest was so high that it forced down the price of paddy at the market.
He added that the government’s ban on food importation crashed the price of a bag of maize from N10, 000 to N7, 000, that of a bag Sorghum from N13, 000 to N7, 000.
According to him, restricting forex for food import will boost local food production.
The South-West Chairman, All Farmers Association of Nigeria (AFAN), Chief Femi Oke expressed gratitude to President Buhari on the matter.
He explained that importers in the food industry were killing the efforts of the local processors to implement massive processing of food products which hitherto were imported expressively into the country.
He said the Government ban on importation of rice has helped the sector to take advantage of the policy of the Federal Government to generate huge returns.
According to him, the decision will ensure forex savings, job creation and investments in farming and local processing of food products.
He said the CBN’s action will help to unlock the huge potential of the sector by developing agricultural value chains and agro-allied industries that process and add value. This, according to him, will help local farmers to become competitive and raise their incomes.
The Chairman, Agriculture and Non-oil Group, Lagos Chamber of Commerce and Industry, African farmer Afioluwa Mogaji said the restriction was a positive one, adding it was capable of bringing development if efforts were made to stimulate investment in infrastructure.
While the restriction is targeted at protecting the local industry and saving forex, Mogaji said the government must mobilise the different agencies to work together to create synergies in production, regarding infrastructure to boost food availability and distribution.
For example, he added that while Nigeria’s climate is perfect for tomato production, some of it goes to waste due to lack of refrigeration and transport facilities. This is why the country is heavily dependent on tomato imports and local farmers struggle to survive.
He noted that while the Presidency has placed irrigation and other farming equipment on zero duty, the Customs is yet to enforce it, thereby working at cross purpose with the government’s goal to achieve food security through provision of infrastructure for farming and local food processing.
According to him, the challenge of value-added features in all areas of agriculture, attributing it to low levels of investments in agribusiness and the macro level and lack of capital and even economies of scale at the micro level for rural farmers.
According to him, the Group shares the commitment of the government to addressing agriculture and food security issues, as the issues are critical not only to economic development but to the future of food production.
Former Presidential candidate of the Young Progressives Party (YPP), Kingsley Moghalu faulted President Buhari’s directive to the CBN, on non-provision of forex for food importation.
In a series of tweets on his official handle, the former deputy governor of the CBN also asked Buhari to allow the apex bank to discharge its mandate independently.
Moghalu also noted that political interference in CBN’s economic policies leads to poverty and also weakens institutions.
He wrote on Twitter; “Is @cenbank now a ministry to be “directed” by President @MBuhari? Article 1(3) of the CBN Act 2007 states ‘To facilitate the achievement of its mandate under this Act…the Bank shall be an independent body in the discharge of its functions.
“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 a weak economy is weak institutions.
“Our marketplace should be regulated and guided in a rational manner that creates a level playing field. Our economy will not be saved by Ad Hoc political decisions like this, handed down by the very institutions that should be shielded from the whim and caprice of politicians.
“Nigeria’s entire economy appears to have been sub-contracted to our central bank, including industrial and trade policy. In the process, the economy has fared poorly and the Bank has lost its independence. This is sad!
“@NGRPresident should leave @cenbank alone to discharge its mandate independently within the ambit of the CBN Act and stop “directing” it. @cenbank should on its part assertive its independence (assuming it actually believes it should be independent, but the Act says so, clearly!”
Recall that while giving the directive at his hometown in Daura, when hosting APC Governors, Buhari said that his order to the CBN to starve food importation of foreign exchange stemmed from the steady improvement in agricultural production and attainment of full food security in the country.
Former president of the Association of National Accountants of Nigeria (ANAN), Samuel Nzekwe, commended President Buhari for the directive.
He said that the Federal Government’s decision to put a halt to the practice was a welcome decision which would go a long way in stabilising the economy and freeing forex for more crucial items.
He, however, urged the Federal Government to be cautious in the implementation of the directive while also ensuring that the nation produces enough food for local consumption.
Nzekwe noted that a situation where imported foods on the list of banned items were not met by local production may cause some discomfort in the country. “The nation is currently facing insecurity and other challenges which had prevented farmers from going to the farm.
“A shortfall in the production of those banned food items could create another problem for the country,” he said.
Nzekwe stressed the need for government to urgently address the security challenge in the country to ensure that food insufficiency that could hinder the implementation of the forex ban was tackled.