NIGERIA – Following the recent directive by Nigeria’s President Muhammadu Buhari ordering the Central Bank of Nigeria to stop providing forex for food importation in the country, several stakeholders have called on the Government to rescind its decision.
Led by the Lagos Chamber of Commerce and Industry (LCCI), some stakeholders pose that implementation of the directive will have an adverse effect to the country’s economy.
According to the President, the directive was given to improve agricultural production and attain full food security in Nigeria.
The Nigeria Employers Consultative Association (NECA) commended the initiative but reiterated that the country could not adopt such a policy since Nigeria currently relies on importation to make up for the shortfall in local production.
Considering that the West African country has a population of about 200 million people, Mrs Zainab Abubakar of the Department of Economics, Federal University Dutse argues that currently, Nigeria does not have the capacity to produce enough to feed its population.
According to Food and Agriculture Organization (FAO), although agriculture remains the largest sector of the Nigerian economy, employing two-thirds of the entire labour force, production hurdles have significantly stifled the performance of the sector.
Timothy Olawale, the Director-General of NECA insisted that the Federal Government should give businesses a period of five years to adjust adding that immediate implementation could result to harsh economic consequences.
“We commend the President and indeed Federal Government for its numerous efforts at ensuring food sufficiency in Nigeria and protection of local farmers.
“Though the recent thrust towards the withdrawal of forex for imported foods is laudable and welcome, the timing, however, calls for concern,” Olawela said in a Nairametrics report.
The Director-General of LCCI, Muda Yusuf has moved to seek more clarification on the items categorised as food in the context of the ban.
“First, there is a need to get more details and clarifications on what exactly constitutes food items in the context of the presidential directive.
“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, welfare of citizens and the economy,” Muda said.
Arguably, if all food items are declared ineligible for forex during importation, it means that importers will no longer have access to the Investors & Exporters Window (I&E) for foreign currencies required to carry out transactions.
However, rice and other items make up the 43 items earlier placed under forex restriction and hence the latest announcement is apparently viewed as a follow-up to the recent move by the apex bank to restrict forex for milk importation.
FAO reports that Nigeria is one of the largest producers of rice in Africa and the continent’s leading consumer of rice simultaneously one of the largest importers of rice in the world.
Data from the National Bureau of Statistics (NBS) foreign trade report shows that Nigeria still imports food items that costs the county trillions of Naira. As at first quarter of 2019 only, Nigeria’s food and beverage importation stood at US$1.2 billion (N389 billion).
According to the Bureau, between 2015 and 2018, Nigeria imported food and beverages estimated at US$17.8 billion (N5.46 trillion).
Food items largely imported into Nigeria include prepared foodstuffs, vegetables, animals, vegetable fats and oil, other cleavage production and beverages.