Stakeholders’ mixed grill on Forex restrictions on food imports

Dapo Olawuni

Divergent opinions have continued to trail President Muhammadu Buhari’s directive to the Central Bank of Nigeria (CBN) not to sell foreign exchange (FOREX) to food importers.

A cross section of stakeholders in the maritime sector agreed that the directive was to improve agricultural production and attain full food security, while another school of thought states that it would further make it difficult for Nigerians to afford stable food.

They believe that Nigerians and their appetite for foreign made goods has caused the country to become a dumping ground for all manner of foreign products which is a burden on the nations foreign reserve.

Apart from the concern on foreign exchange, operators believe that some of the imported foods which is mostly patronized by Nigerian elites, has been confirmed to cause cancers and other terminal illnesses.

President Buhari who hosted All Progressives Congress (APC) governors to eid-el-Kabir lunch at his country home in Daura, said the foreign reserve will be conserved and used for the diversification of the economy, and not for encouraging more dependence on foreign food import bills.

“Don’t give a cent to anybody to import food into the country,’’ he had said.

However, Founder of the National Association of Government Approved Freight Forwarders (NAGAFF) in a chat with journalists at the weekend noted that the government has not placed a total ban on food imports, hence it remains a source of investment for importers abroad.

He argued that some of the policies of the government does not really add value to the maritime sector.

“For instance, the 43 items that were delisted from accessing foreign exchange, technically, by virtue of the position of the Central Bank of Nigeria which is uncommon, it tends to create problems in the sense that the 43 items are banned, if the commercial banks stopped registering form M”

“Again, under the Destination Inspection procedure, you make declaration for customs purpose, that takes customs to a higher level of physical examination and this is time consuming”

“The position of Mr. President on ban on food import is the uncommon support I have been talking about which is being carried out by CBN. If you say that food import would not enjoy forex, this does not mean that a Nigerian who has money cannot import it, if the CBN had directed that commercial banks cannot register form M, technically it means you have banned the cargo” he argued

The NAGAFF founder stressed that forex restriction on food import is even a source of investment because Nigerians outside the country can now get the money and import food into Nigeria.

According to him, there are three categories of financing goods import; first is goods imports that are valued for foreign exchange, second are those not valued for foreign exchange and thirdly, bills for collection.

“So, when you go through confirmed letters of credit, it means that CBN must give you that grace of allowing you to use the forex.
When it is not valued for foreign exchange it means that you source for your money”

“Under the foreign currency Act, if you have $10,000, you are free to go, anything outside this, you must made declaration and show the source.
So, if you have money, you can bring in cargoes without foreign exchange, provided you can show the source.
And if you bring in the cargo and say it is billed for collection, the government will not pay”

“The question is, the ‘food’ in question, do we have the substitute in Nigeria? The government has better information on things to be banned or not to be banned, what makes a country grow is industrialization, and I want to believe that every Nigerian also know that industrialization is key, vis-a-vis transfer of technology, employment opportunities and so on”

On his part, President of Lagos Chamber of Commerce and Industries (LCCI) Muda Yusuf noted that Nigeria has been going through food inflation in the last couple of years due to insurgency and attacks on farmers.

While highlighting the challenges with food sufficiency in Nigeria and meeting up local production to feed the citizenry, he said “Over the last couple of years, food inflation had been a source of worry. It has consistently been ahead of core inflation”

“This is a 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 smallholder farmers, with little mechanisation 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,” he added.

He said 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.

A bonded terminal operator in Lagos, Timothy Awogbemi who spoke with Nigeriamaritime360.com commended President Buhari for banning forex to importers of food items, saying that this would lead to food sufficiency in Nigeria.

“What the president is trying to do is to encourage the local farmers, it is not a total ban, what it means is that you cannot access FOREX but you can still import if you want to”

“The federal government wants to encourage the local farmers and I think this is good”

“We cannot wait until we have food sufficiency before policies are put in place, this policy will encourage the farmers and encourage more people to go into farming, and this is the only way we can be self sufficient in food” he said

On his part, Board of Trustees Chairman of Association of Registered Freight Forwarders of Nigeria (AREFFN) Dr. Frank Ukor told Nigeriamaritime360.com that the policy has its merit and demerits.

He said that forex that is saved from use for food import can be channelled to other more demanding and more useful areas of the economy.

Dr. Ukor however warned that withdrawal of forex for food import will have more adverse effect on Nigerians.

According to him, “Foods brought into this country will cost more and it means that only a few Nigerians who can afford them can have them, while majority of us who cannot afford the high cost will starve”

“It is not that the food items will not come in, but the price of the ones brought in from forex sourced from alternative market will be very prohibitive”

Ukor said the President would have waited until there is food sufficiency before withdrawing forex for food importation.