President Muhammadu Buhari touched a raw nerve during his recent Eid-el-Kabir luncheon with APC governors when he announced his directive to the Central Bank to stop the sale of foreign exchange for importation of food into the country. He was reported to have based the decision on the belief that agricultural production had stabilized and the country was already inching towards food security.
That decision has drawn much ire across the country, as it is certain to lead to a significant rise in the prices of food products. Worse still, the ban on forex allocation has been misinterpreted in many quarters as a wholesale ban on importation of food, even when this is not so.
The decision to ban forex allocations for food imports follows the placement of 41 products on the forex sale ban list, in 2015. The idea behind the ban is not only to reduce the pressure on the naira occasioned by huge imports bill, but also to encourage the local production of food such as chicken, fish and rice.
There is no arguing the fact that Nigerian’s huge food imports bills which run into billions of naira is a drain on the nation’s limited forex earnings. It is partly the reason that the dollar exchange rate is so high as the nation imports more food and other products than it can afford. The over-dependence on imported rice, wheat flour, sugar, milk etc also contributes to the growing unemployment in the country. We have a situation in which the country’s huge population depends on food imported from all parts of the world even when we have good fertile land that is suitable for farming and a large number of unemployed persons. Unemployment has become a huge problem and the growing idleness of our youths is already fueling insecurity as the devil finds work for idle hands to do.
There is no doubt that the increasing robberies, kidnapping and even insurgency are results of the growing despondency and desperation of unemployed and under-employed persons, who have more or less become irrelevant in the developmental scheme of the country. Many of these are citizens who have lost all hope of making a legitimate living in the country. If Nigeria had been able to sustain agricultural and industrial production, and our food and other factories were operating at optimal capacity, the tendency for our youths and other unemployed persons to opt for a life of criminality will be reduced.
While our factories are shutting down over a barrage of problems such as poor electricity supply, low purchasing power, poor incentivization and financial inadequacies, our penchant for imported foods keeps the farms and factories of other countries bubbling, as they struggle to meet their exports to Nigeria.
Certainly, this scenario is not sustainable for a country that hopes to be food secure and keep its citizens positively engaged. It is necessary, however, to point out that a sudden ban on allocation of forex for food imports will lead to a sharp rise in the prices of food items. This is because importers will now have to source for forex at higher rates and import less, while the shortage and higher prices of imported food items will also fuel a sharp increase in the prices of locally produced goods.
What the government has to do is to moderate the ban or give sufficient notice to cushion the effect of the inevitably higher cost of food on the masses. While there might have been an increase in the production of some food items like rice, Nigeria cannot be said to have fully steadied its agricultural production or be on its way to food security. This cannot be said to be so when a large amount of major food staples such as rice, fish, wheat flour and sugar eaten in the country is imported.
What the government needs to do at this time is to further boost food production. Rice production must go beyond the successful Kebbi rice experiment. More parts of the country should be made to enjoy the massive support for agriculture that is glaring in the Northern part of the country.
If we have to achieve food security, it is not through agricultural production that is focused on a particular part of the country. Every geo-political zone must be helped to significantly increase production for local consumption and exports in products in which they have comparative advantage. By doing this, more jobs will be created, instead of exporting our jobs to Chinese factories. Many Nigerians can be employed to keep the machines in our factories rolling. This will be a win-win situation for the country.
There are so many things tied to the decision whether to or not import food. Only last week, the head of the Federal Inland Revenue Service was querried for the country’s reducing tax receipts. As he later explained in a letter that has also gone viral, reduced economic activities and the depression witnessed by the country cannot but lead to lower tax receipts.
It follows, therefore, that a total ban on food imports will significantly reduce import duties payable to the Customs service. The decision to restrict food imports from the official forex window should, therefore, only follow extensive discussions and a strong commitment to the idea by the relevant stakeholders, including the farmers who are expected to raise local food production to meet the shortfall, the Customs, which will lose revenue, the food processors who will be required to increase their activities, the banks, which will have to increase financing of the agricultural sector and the Federal and State Ministries of Agriculture, which must synchronize all the relevant activities and programmes geared towards increased agricultural production.
It is not totally unexpected that foreign commentators, including someone in a letter to the Editor of the Financial Times of August 15, highlighted the likely increase in food smuggling, food shortages and higher prices that are likely to result from the ban. The Federal Government, before implementing the forex ban, must therefore emplace strategies to guard against these problems. The ultimate objectives of the forex ban, which include reduction of food imports bills, creation of employment in the agricultural value chain and the boosting of food production and security, are worthy objectives. Let the government do all that is required to ensure local food security without taking the prices of the essential commodities outside the reach of ordinary Nigerians.