.Consult widely with stakeholders—MAN
.Moughalu, Rewane fault directive to CBN
.We should worry about the implications of policy pronouncements — LCCI
A former Minister of Education, Dr. Oby Ezekwesili, has faulted President Muhammadu Buhari’s claim of food security in Nigeria, describing him as “‘’completely out-of-touch leader.”
Also some financial analysts and stakeholders including the president, Manufacturing Association of Nigeria (MAN), Engr Mansur Ahmed, Kingsley Moghalu and Bismark Rewane have called on the federal government and Central Bank of Nigeria (CBN) to exercise caution in the proposal to ban food import access to foreign exchange.
Recall that President Buhari had on Tuesday said the agricultural sector under his administration has recorded massive growth and development , adding that Nigeria had attained food security.
Buhari who stated this in his home town,Daura, Katsina Sate, while playing host All Progressives Congress Governors, said his directive to the CBN to stop foreign exchange to food import stemmed from the steady improvement in agricultural production and attainment of full food security.
But Ezekwesili who described President Buhari as a ‘’completely out-of-touch leader’’, faulted the claims made by the President, adding that the directive is a ‘’blunder’’.
According to her tweets, “A completely out-of-touch ‘leader’. He is cocooned away in the grandeur of @AsoRock where they serve him delicatessen and praise-sing to him: “Ranka dede Sir, your Agriculture Policy is working wonderfully. All farmers in Nigeria are now Billionaires & exporting to the US”
“We all know that @NGRPresident @MBuhari has absolute contempt for Data but we shall go ahead and put out here some of the Knowledge he should have had before making this latest blunder of ‘Directing’ what should be an independent @cenbank to “not give a cent for food import”.
“I will share the latest information on Nigeria from FEWS NET, the Famine Early Warning Systems Network, which provides information and analysis on food insecurity around the world.
“That our @NGRPresident thinks we have achieved Food Security says a lot about his Policy-Making.”
Analysts who spoke with Nigerian NewsDirect, Wednesday said the move is going to create pressure in the foreign exchange market, disclosing that prices of food imported into the country would increase.
They said that, the government should exercise caution and gradually work on policies that tend to drive backward integration and investment in agriculture sector.
The president, Manufacturing Association of Nigeria (MAN), Engr Mansur Ahmed, said ban is in line with government drive on its backward integration, stating that the move should be executed with a lot of consultations with key stakeholders.
According him, “In general, it is in line with general idea to enhance backward integration and economy diversification programmes of the federal government.
“I am particularly concerned about agriculture sector where food is produced. We have capacity to boost local production in that sector with the use of local inputs.
“We expected that policy to be executed with a lot of consideration for the short time impact on the economy and most especially on employment. We believe in the way CBN has already halt foreign exchange supply to some items.”
He noted that some sectors require some investment than the others, stating that it is important for policy makers to consider policy direction in those sectors.
He noted that, “The CBN should take operators into consideration. There is no reason why the CBN should not sit operators in various operators. From there, we take into consideration, loss of jobs, disruption of operations, impact on inflation and prices. “These are policies that require continued dialogue. MAN has always promoted backward integration and economy diversification.
“On the other hand, we need to call on our members to make effort to substitute a lot of these imports with local materials. We do not wait for CBN or government to wield the big stick before we do that. I am aware that some of our members are trying to do some in that regards.
“Some value chains are easily developed than the others. Some value chains involve serious investment and time.”
In his reaction, a former Deputy Governor of the CBN, Kingsley Moghalu said the CBN has lost its independence.
In a series of tweets posted after the President gave the directive, Moghalu said the issue isn’t whether or not CBN should allow access to foreign exchange for food imports.
According to him, it is about whether such an economic policy should be imposed by a political authority.
Moghalu said that an economic policy like the new directive is a major reason for the country’s poverty and instability. He also emphasised that a weak economy begets weak institutions.
The former United Nations Officer further stressed that Nigeria’s marketplace should be regulated and guided in a rational manner that creates a level playing field.
Moghalu’s tweets read, “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!
“@NGRPresident should leave @cenbank alone to discharge its mandate independently within the ambit of the CBN Act and stop ‘directing’ it. @cbnbank should on its part assert its independence (assuming it actually believes it should be independent, but the Act says so, clearly!).”
Also, the Managing Director, Enterprises Stockbrokers Limited, Mr. Rotimi Fakayejo, said the pronouncement is going to impact on imported food products.
He said the foreign exchange market would come under pressure, leading to increase in prices of food imported into the country.
In his words, “It is going to affect the prices of those products and at the same time, if the products are going to be available, they will seek foreign exchange by other means.
“That is going to bring competition in the foreign exchange market, which is going to be higher. It will impact on prices of foreign exchange. To me, it is not a positive development.
“The federal government could have considered the foreign exchange ban on food a gradual process.”
Also, Bismarck Rewane, chief executive of Financial Derivatives Company Limited expressed worry over state of independence of the CBN should the apex bank follow through with President Buhari’s directive.
He told Reuters that a curb on foreign exchange for food imports could backfire after Buhari last month signed up to the African Continental Free Trade Agreement (AfCFTA).
“At this point in time these rules will be manipulated in the interest of smugglers and their accomplices,” Rewane told the UK-based media organization.
Eze Oyekpere, Lead Director of Centre for Social Justice (CSJ) a nonprofit organization said in an emailed statement that: “This directive erodes the independence and autonomy of the CBN and presents Nigeria in the image of the Idi Amin fable, when he gave directives to the governor of the Ugandan Central Bank to print more currencies when told that the country was running out of money. This directive is therefore an illegal directive which the Governor and Board of the CBN will obey at their own peril.”
According to him, the “directive is rather a knee jerk reaction to the euphoria of sycophants who tell the President that his agricultural policies are working. And very unfortunately, there is no evidence to support this assertion in terms of more quantity, quality and cheaper foods available to Nigerians.”
Meanwhile, Director-General of Lagos Chamber of Commerce and Industry, LCCI, Muda Yusuf has cautioned against unguarded policy pronouncements by the federal government that will negatively impact investors’ confidence on the economy.
In his reaction to the proposed ban of foreign exchange to food importation, he stressed the need for the government to make further clarifications on President Muhammadu Buhari’s directive to the CBN on the issue
He said: “First, there is a need to get more details and clarifications on what exactly constitutes food items in the context of the Presidential directive.
“The HS codes of the items affected need to be indicated. It is hoped that these details would be made available in subsequent releases by the CBN. This is essential for proper analysis of the possible impact on investment, welfare of citizens and the economy.
“Meanwhile, the CBN before now had placed many food items on the forex exclusion list. It will be interesting to see what additional food items are being contemplated as additions to the list. In all of these, we need to worry about the implications of policy pronouncements for investors’ confidence and the general sentiments of investors.
“Unemployment levels in the country has reached a disturbing level of over 23%, and rising. Youth unemployment is even much more. Yet the panacea for dealing with the scourge of unemployment and poverty is investment.
“If policy and regulatory risks continue to escalate as we are currently experiencing, the chances of stimulating investment, whether domestic or foreign, would remain dim. Current forex policy conceptualization and management are adversely impacting investment.
“It is critical to scale up stakeholder engagement on the strategies for economic diversification and self-reliance. Rigorous impact study should precede major policy changes, supported by empirical data. This is necessary to minimize shocks and dislocations in the investment environment. This is also imperative to stem the increasing cases of job losses.
“Over the last couple of years, food inflation had been a source of worry. It has consistently been ahead of core inflation. This is reflection of the productivity challenges in the agricultural sector which has lately been complicated by security challenges across the country and attacks on farming communities.
“The sector is still largely dependent on small holder farmers, with little mechanization and application of technology. Transportation is another key impediment to food security in the country. These are fundamental issues that need to be addressed, and urgently too.