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President Muhammadu Buhari might have food security in mind when he directed the Central Bank of Nigeria (CBN) to stop providing foreign exchange for food importation. We believe that the president took a good step to ensure that food items that can be produced locally are denied forex. However, the order was interpreted in some quarters as unnecessary meddlesomeness in the running of the CBN. Section 1(3) of the CBN Act 2007 clearly ensures the independence of the apex bank.
The president gave the directive simply because of the “steady improvement in agricultural production and the attainment of food security” in the country. The president’s action was further anchored on the belief that if importers of food items were denied access to forex, Nigeria’s external reserves would be conserved and used for the diversification of the economy. On this score, the president meant well even though his directive was reportedly misinterpreted.
Without doubt, forex restriction will encourage local production of food items and also create jobs. However, the president’s directive was short of revealing the affected food items. Therefore, we urge the CBN to take a look at the food items already in its prohibition list, and the new ones it plans to add before taking action on the matter. What is important is for us to grow food crops which we have comparative advantage. For now, the issue of food security is grim. Farm yields remain among the lowest in the world, even though more farmers have received incentives from the CBN in the production of many primary food items in some states. But, that is not enough.
Data from the Agriculture Promotion Policy and other global agencies shows that Nigeria has a deficit across every thirteen major crops as well as a 60 million poultry bird deficit. According to the National Bureau of Statistics (NBS), the trade in agricultural goods stood at N322.4 billion or 3.9 per cent of the value of total trade in agriculture in the first quarter of 2019. The export component of the trade was valued at N86.1 billion. Compared with N97.3bn recorded in the previous quarter, this represented a decrease of 11.89 per cent. In terms of imports, agricultural products were valued at N236.33bn or 6.4 percent of total imports during the period under review.
Therefore, contrary to the president’s claim, Nigeria is not close to achieving food security. At present, many primary food items consumed in the country are smuggled into the country. Statistics show that Nigeria is short on rice, maize, sugar and wheat. Also, the capacity to locally produce wheat, flour, sugar, milk and even rice, has been undermined by smuggling and herdsmen’s attacks. Data on wheat production shows that Nigeria consumes four million metric tonnes yearly, but produces only 100,000 metric tonnes annually. Also, data from World Market and Trade showed that Nigeria produced 4.66 million metric tonnes of rice in 2018, and 4.79 million metric tonnes expected in 2019, and 4.90 million tonnes in 2020. The figures indicated that Nigeria is expected to consume 6.70m tonnes, 7.20million tonnes of rice in 2019.
Arising from these figures, it is clear that Nigeria is rice deficient this year by 3.12 million metric tonnes, while in 2020, it will be short by 3.21 million metric tonnes. Africa Rice Centre has also confirmed that Nigeria is not yet sufficient in rice production as indicated by the rate of smuggling of foreign rice into the country. In terms of sugar production, Nigeria still accounts for seven per cent of its 1.5 million metric tonnes yearly demand.
For maize, Nigeria produces 12 million metric tonnes yearly while it needs four million metric tonnes to close the deficiency gap and another four million metric tonnes to become maize-secure. At present, yields per hectare in Nigeria remain only 20-50 per cent of comparable yields in emerging economies like Brazil, Malaysia, Thailand and Indonesia.
The president’s directive came at a time when the nation’s external reserves dipped by about $2.65billion. Therefore, placing a blanket ban on forex for food importation will likely increase smuggling and push sub-standard imported food items into the country. While self-sufficiency in food production is desirable, we urge the CBN to be circumspect in enforcing its monetary policy on forex restriction so that it will not create unintended consequences or precipitate food crisis.
We, therefore, call for more funding of the agricultural sector so that government can achieve its food security objective. Since agriculture is key to sustainable development and food security, let there be consistent, long-term agricultural policy.
