President Muhammadu Buhari’s directive to the Central Bank of Nigeria last week not to sell foreign exchange to importers of food items has kicked up a cacophony of sentimentalism totally uncalled for. The President had then explained that he ordered the forex ban on food imports because he believed there has been a “steady improvement in agricultural production, and attainment of full food security”. According to him, foreign reserves will be conserved and utilized strictly for the diversification of the economy, not for encouraging more dependence on food imports. “Don’t give a cent to anybody to import food into the country,” he ordered the CBN.
However, critics of the President, beneficiaries of import substitution in particular, have questioned his constitutional right to give orders to the CBN. They say the food security narrative is wildly exaggerated. What more, they misinterpret the order to mean a total ban on food imports. In truth, however, it says that individuals can still import food items but they have to source their foreign exchange from, not the CBN, but commercial banks. Presidency, over the weekend clarified what the directive meant. “To be absolutely clear, there is no ban – or restriction – on the importation of food items whatsoever. The President has consistently worked towards strengthening Nigeria’s own industrial and agricultural base. A recent decision sees the Central Bank maintain its reserves to help growth of domestic industry in 41 product sectors rather than provide FOREX for the import of those products from overseas. Should importers of these items wish to source their FOREX from non-government financial institutions (and pay customs duty on those imports – increasing tax-take) they are freely able to do so. Diversification of FOREX provision towards the private sector and away from top-heavy government control, a diversification of Nigeria’s industrial base, and an increase in tax receipts – are all policies one might expect (critics) to support.”
On whether or not the President usurped the powers of the CBN, its governor Godwin Emefiele said Buhari’s directive was in line with the CBN’s existing foreign exchange policies since 2016. Speaking at the induction retreat of Buhari’s ministers-designate on Monday, Emefiele said the directive was notig new. “If you recall, we started with about 41 items (food and non-food items), because we believe that those items can be produced in the country. As we stand today, there are about 43 items on that list and I will say substantially most of them are food items.” He said it made no sense for the nation to “waste foreign exchange” importing items that can be produced locally in the country and help to reduce unemployment which he said was fueling insecurity.
In summary, the forex ban on food imports is nothing new. If it can help to wane off imports dependency, it is only right, as Emefiele has said, to put more items on the imports ban list. “I will say that, to be honest, we would aggressively go more into the list of items that are being imported into the country, items that can be produced in Nigeria. I will like to stress that we would ensure that more of these items will get on the list of items that are going to be restricted from accessing foreign exchange in Nigerian banking industry not just from the CBN source.” This is not coming from a rubber stamp, but a seasoned banker known for being independent minded. A man not originally appointed by Buhari but one who eventually won the President’s trust enough to have been reappointed as CBN governor.
Additionally, local rice has replaced imported American and Thai rice on the menus of most Nigerian families. Because of increased local production last year, a glut has been reported in maize, bean and other food items this year. Prices are crashing as a result. Staying the course can only help the economy, not hurt it, in the long run.