Chinyere Anyanwu, [email protected]
The Federal Government, with the motive of improving agricultural production and ensuring the attainment of full food security in the country, recently directed the Central Bank of Nigeria (CBN) to desist from providing foreign exchange for food importation.
By implication, the stoppage of forex for food import, which seems to be a follow-up to the recent decision by CBN to restrict forex for milk importation, means that importers will no longer have access to the Investors & Exporters Window (I&E) for foreign currencies required to carry out transactions. Therefore, investors will have to source their own forex through bureaux de change or other sources at higher costs, a situation that will place the burden of bearing the extra costs incurred by the investors on consumers.
In its argument to justify the decision, the government stated that the country has “achieved food security” and, therefore, does not see any reason to continue supporting food import into the country through official provision of forex. This has prompted a wave of reactions from several concerned stakeholders across various sectors of the economy, especially the agricultural sector.
The CBN, responding to reactions on the directive said, “if we have a food item that can be produced in the country, why should we waste scarce foreign exchange importing those items into the country. Why should we be exporting jobs to other countries?
“Today we are complaining that there is a high rate of unemployment leading, to some extent, the level of insecurity in the country. Why should we allow people to import food that can be produced in the country? We need to improve wealth in our rural communities and I am saying we will not change course, we will even be more aggressive on this programme.”
Despite government’s claim that the country has “recorded steady improvement in food production and attained full food security,” statistics from the National Bureau of Statistics (NBS)’s foreign trade report reveal 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 the first quarter of 2019, Nigeria’s food and beverage importation stood at N389 billion or $1.2 billion. Major among the imported food items are processed foods and raw foods, which include grains, prepared foodstuff, vegetables, animals, vegetable fats and oil, and beverages, among others.
In response to government’s claim of “full food security”, its ban on forex for food import and reality on ground in the country, stakeholders have expressed fears over the implications of the directive on the consumer, first and foremost, and the economy at large. Some highlighted positive and negative impacts of the forex ban, stressing that it might give rise to a worsening of the economy since the country has yet to attain food security and sufficiency.
One of those who spoke with Daily Sun in an exclusive phone interview, Dr. Victor Iyama, the President of Federation of Agricultural Commodities Association of Nigeria (FACAN), sees the decision as a welcome development if Nigeria aims at achieving food self-sufficiency and growing its economy.
Iyama is of the view that, “if we really want to grow our economy and feed the nation and feed the world, that is a decision in the right direction. We have to learn how to sacrifice for the benefit of the future generation. Everybody is talking about China today. Of course, Chinese people denied themselves of so many things. Some generations did that. If there are no sacrifices, there is no way we can develop.”
He said, “Ive always been an advocate of outright ban on food importation. For me, it’s a decision that has been long over due. Look at our import; it’s almost 500 per cent higher than our export. Tell me why we should be importing fruit juice when we have tonnes upon tonnes of fruits wasting every year. Besides, they’ve not said they shouldn’t import; they only said, source for your own forex.”
Speaking on steps that can ensure food security and sufficiency, and therefore stem food import, Iyama who noted that almost 40 – 45 per cent of food produced in the country go to waste, said, “we must find a way to safeguard our food through good storage and good preservatives.
He said his organisation, FACAN, is “looking at possibilities of building special purpose warehouses that will be insulated with some materials that will preserve foods. FACAN has signed an MoU with a Russian company that will build such warehouses and when you put anything there, it will preserve it for almost six to nine months and it will still be fresh. You can even store grains there without having to put chemicals and they will be there for months. Once we do that and it works, we can be able to replicate it; get state governors to invest and we can take it all over.”
Another stakeholder, Mr. James Oyesola, National President of United Nations Environment (UNEP) Ecosystem Based Adaptation for Food Security Assembly Nigeria (EBAFOSA), stated that government should not have embarked on a “blanket cutting of forex for the import of all agricultural inputs.”
Oyesola explained that, “the basic thing is to discourage the importation of what we are producing. The area we have comparative advantage that we need to upscale in terms of production, they can ban forex for such items.
“If you are talking about things like rice which they are now encouraging farmers to go into, they can ban forex for the importation of such items. They have to look specifically at which of these food items we have started producing sufficiently.”
According to him, the ban on forex for food import, “has both positive and negative impact. If you ban those specific ones like rice in order to encourage local production, that is a positive aspect; it will encourage farmers to produce more and also encourage the rice value chain. But have we done enough in the area of rice production in Nigeria in terms of quality and quantity that will match the ones they are importing? We need to look at that. If we make sure we have done all these, we don’t need to tell people not to import. When the quality and the price they are selling here is better than the ones they are bringing in, they will discontinue importation.”
He stressed the need to encourage value addition, especially for perishable commodities with short shelf life, stating that government should consider establishing produce markets across the country to buy off excess produce from farmers and process them into products to give them better form of storage. He added that this will ensure continuity in production as farmers will have enough money to continue to produce, which in turn will ensure stability in the prices of those commodities and availability of food.
Also, the National President of Nigeria Cassava Growers Association (NCGA), Pastor Segun Adewumi, has this to say on the implication of government’s ban on forex for food import: “It’s a welcome idea but what I want us to note is that what we are doing in Nigeria is subsistence farming. We are not doing commercial farming and the cost of production in Nigeria is too high.
“We don’t need to ban forex for food import. What we need to do is to collapse the cost of production. If we collapse the cost of production, we won’t need any incoming food again. The ban on forex for food import is good, but it will be better if we concentrate on how we can reduce the cost of production by doing commercial farming.”
According to him, the way to discourage food importation is to empower local farmers to produce enough for the nation. He said, “the government should give local farmers the enabling environment to produce at reduced cost. For instance, I’m in charge of cassava. There is mechanical cassava planter and mechanical harvester. When you use those equipment, it will collapse the labour cost and where you used to get 20 tonnes, you can get 35 tonnes. That’s when we can be thinking of banning but if you ban now, when we don’t have the (level of) production (to stem importation), when our cost of production is twice or three times of that in the international market, it will affect the lives of people. When we begin to have good quality, quantity and cost, you won’t need to ban because it won’t pay to import anything.”
All stakeholders are of the opinion that CBN’s ban on forex for food import, based on Federal Government’s directive, is a laudable step but caution that such step should only be taken when there is concrete assurance that the nation has attained food self-sufficiency.
Meanwhile, as an outcome of the ban, a bag of rice which used to sell for between N14,000 and N15,000 now goes for between N20,000 and N21,000.