Forex restriction on food and fertilizer import
President Muhammadu Buhari’s recent directive to the governor of the Central Bank of Nigeria (CBN), to restrict foreign exchange for the purpose of food and fertiliser importation into the country should not be trifled with. The presidential order emerged at the National Food Security Council meeting held in the nation’s capital, Abuja.
To underscore the importance of the charge on the governor of CBN, the President emphasised: “I am restating it, nobody importing food or fertiliser should be given foreign exchange from Central Bank. We will not pay a kobo of our foreign reserve to import food or fertiliser.” That was the second time the president had directed the CBN on this forex policy this year.
Notwithstanding this outright ban on the importation of food and fertiliser with Nigeria’s foreign exchange, the window of importation of the items remains open. That is, open to private importers who can obtain their foreign exchange from sources other than the CBN. Impliedly, importation of food and fertiliser is still open for private individuals and corporate organisations that can obtain the foreign exchange they require from independent sources.
However, given that there does not appear to be an effective implementation commencement date and deadline, a Central Bank caught in this type of situation and circumstance should, of necessity, seek immediate clarification in order not to either go contrary to the order or jeopardise contracts already in the pipeline before the order. Nevertheless, with or without specified effective commencement date, it will be in the interest of the country to see through contracts that have been entered into – partially or fully -before the order.
It must, however, be acknowledged that President Buhari appreciates the gains that will accrue to the country upon implementation of this directive, all things being equal. For instance, local food producers will not only be encouraged to produce more but will also have less or no competition from other countries. What is more, a boost in local food manufacturing may result in needed food security for the country with resultant positive effects on the health of the citizens. Besides, fertiliser producers in the country will also produce more. And more job opportunities will be created thereby reducing the current high rate of unemployment.
It is nevertheless interesting that the President’s directive is coming or being “restated” when the country is just setting goals for National Food Security and planning to cultivate 20,000 to 100,000 hectares of land in every state of the federation. The presidential intervention crops up when prices of food and most other items are on the increase. This new deal is coming when Nigerians have just been confronted with a hike in prices of electricity and fuel amid six months lockdown occasioned by the advent of the COVID-19 pandemic. This adjustment policy comes when there is no visible sign of sufficiency of domestically produced food across the land; when agriculture inputs are lacking; when the weather conditions for agro-business, for example farming, are inclement and challenging. This policy thrust is coming with high levels of flooding in most areas where the country depends on for most of its food needs; when there are pervasive security challenges (abductions, cattle rustling, kidnappings, armed robberies, etc) all over the country especially in the nation’s food basket regions. This painful surgery is expected when the negative weight of the COVID-19 pandemic that is imposed on the economy remains without abatement. The forex policy comes when there is an apparent lack of needed infrastructure to drive large-scale production of agricultural materials and food.
We must not forget that, throughout the country, the issue of widespread poverty is not just palpable but real and daily stares all of us in the face. We also must acknowledge that when private individuals and companies start getting from non-CBN sources the foreign exchange they need for food importation, the already high cost of food will be exacerbated. Furthermore, if the private foreign exchange resources are not available or are insignificant, then food imports will not even be expected from this channel hence, the already worse prices will become worst.
With all of these hardcore negatives in today’s Nigerian economy and society, can this be the right or appropriate time to ban the importation of, no other things but, food and fertiliser with foreign exchange belonging to Nigerians? Nobody should need a crystal ball to foretell that the existing food situation and the manufacturing landscape will turn awry without adequate preparations and evidence of enough strong cushion to accommodate the obvious and foreseeable but side-stepped implications of or fallouts from the President’s order.
In the main, as this newspaper once noted when the presidential directive was first mooted this year, the directive should not be construed as a means of discouraging importation. Importation of food items for a country is not a glorious development.
The directive should be seen what it is: a wakeup call for self-sufficiency in food production. It is a challenge to investors who would like to take to agriculture business. We would also like to add that the president should ensure that there is an enabling environment too for agriculture to thrive. There should be robust investment and commitment to rural electrification schemes and good rural road projects, among other needs of agriculture businessmen.