Forex restriction: No ban on food importation, Presidency

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…as NASME, AFAN, SSSN, LCCI differ

By Ayo Fadimu

The Presidency has come out clear that it has neither banned nor restricted importation of food items in the country. The Federal Government in a statement on Sunday by  the Senior Special Assistant to the President on Media and Publicity, Mallam Garba Shehu in Abuja also explained that the recent directive by President Muhammadu Buhari to the Central Bank of Nigeria (CBN), to stop providing foreign exchange for importation of food items did not mean a restriction on the importation of food items.

The Presidency while replying to a report in FINANCIAL Times published on 15th August 2019,  titled, “Muhammadu Buhari sparks dismay over policy shift on food imports” said that any importers of food items that wished to source FOREX from non-government financial institutions (and pay customs duty on those imports – increasing tax-take) were free to do so.

Shehu wrote, “Your article “Muhammadu Buhari sparks dismay over policy shift on food imports” (15 August) suggests the Nigerian Government is restricting the import of agricultural products into the country. “ This is simply incorrect. To be absolutely clear, there is no ban – or restriction – on the importation of food items whatsoever. “ President Buhari has consistently worked towards strengthening Nigeria’s own industrial and agricultural base.

A recent decision sees the Central Bank maintain its reserves to put to use helping growth of the 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, something the FT has berated Nigeria for not achieving on many occasions) 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 the Financial Times to support.

“Yet for reasons not quite clear, the author and this newspaper seem to believe the president’s administration seeks to control everything – and yet do so via policies that relinquish government control. “ We look forward to the next installment of Mr. Munshi’s bizarre and puzzling article series.” Garba said

In the meantime, the All Farmers Association of Nigeria (AFAN), has applauded the decision of the restrict forex on food importation.

While talking exclusively to Nigerian NewsDirect, the Spokesman of the Association, Prince Dapo Adesida commended the government for the initiative and described it as a welcome development.

However, he called for the immediate  re-introduction  the Growth Enhancement Scheme (GES)so that more than five million Small Holders Farmers can be assisted yearly through the subsidy scheme

“The Anchor Borrowers Program has not reached enough active farmers which means presently  the financing scheme has not produced the desired result,” Adesida said.

While speaking in similar vein, the Nigerian Association of Small and Medium Enterprises (NASME) also supported the move, saying that the Federal Government’s decision on foreign exchange restriction to food import is favourable to the association and manufacturers in the country.

The Chairman, Lagos State Chapter of NASME, Mr. Solomon Aderoju, who stated this in Lagos during the association’s press briefing announcing its forthcoming 3rd Edition of Business Round table scheduled to hold on August 29th, 2019, noted that the policy statement will help in strengthening the country’s currency.

Aderoju pointed out that forex restriction will help conserve Nigeria’s foreign earnings, adding that it will adversely enhance the already weakened Naira.

Commending the government for the giant stride, he said, this is the only way MSMEs would grow, adding that more jobs would be created if well implemented.

According to the Vice President, S/W, NASME, Oladipo Jemi-Alade, the government pronouncement is a new opportunity for the members and other manufacturers in the country to explore the African Continental Free Trade Agreement (AfCTA), saying that the round table was apt.

He said, “Now that AfCTA is open unto us, we have to be prepared for the next level. We want to be in a position to compete favourably with our foreign counterparts. For this reason, we are upgrading our skills, and we have embarked on membership training nationwide to build skils and capacity.”

In his response, Adam Adebayo, Chairman, NASME Cooperative noted that over 200 members have accessed the Anchor Borrowers Fund, stressing that the group have been advocating bann on imported food to enable them process and sell their local produce.

Adebayo said; “We have been exporting primary produce, but now that there is new development, we are happy because we would be able to add value by processing all our produce through our value chain. With this, the government will now bring back the Commodity Board, which will be responsible for price control so that the farmers will not record losses.”

However, the Lagos Chambers of Commerce and Industry (LCCI) said it fears the impacts  of the decision on the on investment, welfare of citizens and the economy and asked the President to mention the specific food items the restriction would affect

While speaking through the Director General of the Chamber, Muda Yusuf, the organization noted that the Central Bank of Nigeria (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” Yusuf said.

He went further, “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.” LCCI said

He added that 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” he adviced.

Similarly, the Soil Science Society of Nigeria (SSSN) has raised alarm over the presidential directive predicting that it will lead to inflation and also reduce the livelihood of Nigerians.

This was disclosed by the president of the society, Professor Bashir Raji, who advised that the president ruminate on both the production and consumption of food in the nation, while also emphasizing that the policy would be laudable if properly articulated. According to him, “a right policy, right timing but wrong approach.”

He stated that Nigeria’s current rice production is about 3.7 million tonnes annually and its requirement is about 8 million tonnes of rice annually, adding that with the outright ban there is no way the country can meet up with the required 50 per cent in one year.

In his words, “Definitely there will be a lot of inflation, there will be high prices and considering the economy at the moment a lot of people will suffer. The president must have been fed the impression that because of the drop in the importation of rice through our ports, the rice we consumed in this country is produced locally which is not true.

“There is a lot of increase in the production of rice locally but there has been increasing smuggling from neighbouring countries which eventually ends up in Nigeria to complement what is produced locally. The policy if properly articulated will be beneficial on the long run but is quite clear that we still rely a lot on importation of food and outright banning is likely to bring about inflation.

“It will also bring about pressure on the black or parallel foreign exchange market and high cost of food, especially rice. We don’t import yam, we don’t import cassava, beans and we don’t actually import most of our staple food; the ones we import are basically rice maybe wheat, milk, sugar and some of the exotic foods.

“Unless we can produce one and a half times what we required, it will not be a good decision to ban outright importation of food, especially now that a lot of people are suffering economically.”

Prof. Raji recommended that the federal government halt FOREX gradually over the next five years, setting objectives to meet up measurable targets and make sure 50% shortfall was met during the period.

He also guaranteed that the society is ready to work with the Federal Government to reduce land degradation and climate change, also anticipating the massive farming activities the policy might generate.

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