Forex Ban: Has Nigeria Attained Full Food Security?
The recent directive by President Muhammadu Buhari to the Governor of Central Bank of Nigeria (CBN) Godwin Emefieleto stop providing foreign exchange for food importation has been received by key stakeholders with mixed feelings. In a statement issued on Tuesday, August 13, 2019, by Garba Shehu, presidential spokesman, the president ordered the apex bank not to give a cent to anybody for food importation, saying by so doing, there would be a steady improvement in agricultural production and attainment of full food security.
On the surface, the intent seems genuine but the implication of the implementation of that order would be convoluted in many areas. First, the order is against the independence of the Central Bank of Nigeria. According to Article 1(3) of the CBN Act 2007, ‘In order to facilitate the achievement of its mandate under this Act…the CBN shall be an independent body in the discharge of its functions’.
A professor of political economy and former Deputy Governor of the Central Bank of Nigeria who was a presidential aspirant in the last general election, Kingsley Moghalu has faulted the presidential order which he described as political interference. “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”, stated Moghalu.
On June 23, 2015, the CBN, in its renewed effort at sustaining the stability of the foreign exchange market and ensuring efficient utilization of foreign exchange, excluded importers of some goods and services from accessing foreign exchange at the Nigerian foreign exchange markets in order to encourage local production of these items.
This policy implies that those who import these items can no longer buy foreign currency from the official window to pay the overseas suppliers. Rather, they will have to source forex from the parallel market or Bureau De Change to pay for their imports.
Unfortunately, the Nigerian Customs later classified these restricted products into the 44 items banned from importation. These include food items such as live or dead frozen poultry, pork, beef, bird’s egg, refined vegetable oils and fats) including mayonnaise. Others are cocoa butter, cane or beet sugar and chemically pure sucrose in solid form in retail packs, spaghetti/ noodles, fruit juice in retail packs etc.
To attain food security, there are fundamental indices for measuring the capacity of a nation to be selfsufficient. These indicators include the percentage of citizens and available resources in such area of needs. For instance, what is the level of participation in arable farming and industrial agriculture? How much has the nation grown in the agro-allied industry; which includes food processing and packaging? Basically, there is no economic sense in importing what we have the capacity to produce in abundance. But such capacity must be seen and measurable.
While we are not against the decision to make Nigeria self-sufficient in foods and other basic needs, the president must not be deceived with reports that are fraught with unfounded or exaggerated facts. Many of the so-called farmers are into subsistence farming. The decision of the government should be based on third parties independent research findings such as the World Bank, IMF or organisation like PriceWater Coopers.
In the new directive, President Buhari stated that 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. Much as this is laudable, a survey of the impact of the output as against what is required must be established.
The government should come up with policies that will include incentives for private sector investment in agriculture. We should partner with nations that are self-sufficient in foods, whose economy is driven by industrial agricultural business with huge value chain.
Nigeria currently spends between $1.2 billion and $1.5 billion annually on milk imports and the CBN has just told lenders to stop processing milk imports on a credit basis and is ready to ban access to forex for the imports in order to spur local production.
Good as this may sound, we must not put the cart before the horse. Milk production has many layers. Before a ban, an independent survey must be conducted to know the gaps. What is the available capacity; where are the areas of intervention, what policy(ies) needed to be put in place to increase local capacity and attract direct foreign investments?
The Ministry of Agriculture and the CBN should not be coming out to impress the president with scorecards that are questionable. The welfare of Nigerians must not be sacrificed on the altar of politics. President Buhari should be politically sagacious enough to avoid being deceived.
With all the acknowledged strength of the United States of America in agriculture, she still imports some food items that she lacks the capacity to produce sufficiently. These include live meat animals, fish and shellfish, dairy, vegetables, fruits, nuts, coffee, tea and spices.
The Government also need to consider implication of this new directive on the recently signed African Continental Free Trade Agreement (AfCFTA) treaty. That deal seeks to create a continent-wide free trade zone where tariffs on most goods would be eliminated, and a level playing ground for free imports and exports created. No member nation is expected to take undue advantage of the other.
Finally, all efforts must be put in place to stave hunger from the land. We should not outrightly ban what we don’t have the capacity to produce while we are busy importing petroleum products with the abundance of our God-given crude oil that can be processed for local consumption.