President Muhammadu Buhari gave a new directive to the Central Bank of
Nigeria (CBN) to stop providing FOREX for food importation. According to
the President, the directive was given to improve agricultural
production and attain full food security in Nigeria.

The
President reportedly said, “The Central Bank of Nigeria should stop
providing foreign exchange for importation of food into the country,
with the steady improvement in agricultural production, & attainment
of full food security.”

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Implications of the President’s Statement

Note
that rice and other items make up the 43 items earlier placed under
FOREX restriction. Hence, the latest announcement is apparently a
follow-up to the recent move by the CBN to restrict FOREX for milk
importation.

Following this, 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.

Consequently,
the investors will have to source their own FOREX by patronising bureau
de change or other sources. This comes at a higher cost and the
implication is that consumers will be made to bear the brunt of the
extra costs incurred by the investors.

On the flip side, the
President also stated that Nigeria has recorded steady improvement in
food production and attained full food security. This suggests that the
President is of the opinion that Nigeria has attained food
self-sufficiency, thereby making food importation unnecessary.

A look into Nigeria’s Agricultural sector

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.

FAO further revealed that
the main factors undermining production of agricultural products include
reliance on rainfed agriculture, smallholder land holding, and low
productivity due to poor planting material, low fertilizer application,
and a weak agricultural extension system, amongst others.

– As a
result of the several factors inhibiting the growth of the sector, food
remains one of the major commodities currently being imported into
Nigeria.

– As it stands, Nigeria occupies a tripartite position.
FAO reported that Nigeria is the continent’s leading consumer of rice;
the country is one of the largest producers of rice in Africa and
simultaneously one of the largest importers of rice in the world.


Livestock development is an important component of Nigeria’s
agriculture sector with abundant social and economic potentials.
However, 30% of live animals slaughtered in Nigeria are imported from
neighbouring countries.

Food Importation Statistics

A
close look into the National Bureau of Statistics (NBS) foreign trade
report shows that Nigeria still imports food items that gulp trillions
of naira. According to the Bureau, between 2015 and 2018, Nigeria
imported food and beverages estimated at N5.46 trillion or $17.8
billion. As at first quarter of 2019 only, Nigeria’s food and beverage
importation stood at N389 billion or $1.2 billion.

– A further
breakdown shows that Nigeria’s food imports are categorised into primary
(raw) and processed. In Q1 2019, industries imported N196 billion worth
of raw food, while households imported N87 billion.

– For
processed food, industries imported an estimated N82 billion worth of
food items, while household consumption of processed food was put at
N110 billion.

– This means that a total of N389 billion was spent on both industrial and household food importation in Q1 2019.
According
to the NBS, food items largely imported into Nigeria include prepared
foodstuffs, vegetables, animals, vegetable fats and oil, other cleavage
production and beverages.

Some concerns

Mixed
reactions have continued to trail the directive. While much emphasis has
been placed on whether the move is an apparent breach of the CBN’s
independence or not, some have asserted that the announcement might
worsen the economy as Nigeria has neither achieved food security nor
sufficiency.

Reacting to the policy, a former Deputy Governor of
the CBN, Kingsley Moghalu, reacted that the issue isn’t whether or not
CBN should allow access to Forex for food imports. According to him, it
is about whether such an economic policy should be imposed by a
political authority. Moghalu said, “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 Central Bank has lost its independence. This is
sad!”

The downsides

No doubt, Nigeria’s
agricultural sector is full of potential and there is a large room for
growth. While the current administration has introduced several policies
to help improve food security, not much progress has been recorded and
the government should address this.

– According to global hunger
index (GHI) 2018, Nigeria ranks 103 out of the 119 qualifying countries
with a score of 31.1. This means Nigeria suffers from a level of hunger
that is very serious.

– A closer look at GHI report shows that Nigeria is worse off in hunger index between 2000 and 2018.


Nigeria’s fragile economy still manages to import more Agric. products
than export. This means that the current domestic production cannot meet
demands.

– While FOREX restriction on food importation is
laudable, the government needs to carefully work on the gradual
implementation of the policy in order not to heap more misery on the
economy.

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