August 17, 2019

Forex ban on food importation: Many factories will die — Stakeholders

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President Muhammadu Buhari

…We’re sending wrong signals to investors

By Emmanuel Elebeke & Gabriel Ewepu

Stakeholders in the agriculture sector of the economy have tackled President Muhammadu Buhari over his directive to the Central Bank of Nigeria not give foreign exchange to importers of food items. Some critics accused the president of taking the country back to the military era when directives are issued with military fiat.

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President Buhari

The Presidential directive, according to others will also kill many factories.

Mr Innocent Madumere, Manager at Erisco Foods, argued that the directive will have negative impact on the economy because the local manufacturers use Forex to raise capital for their businesses and “if they stop Forex the entire manufacturing sector will suffer”.

According to him, “apart from affecting our capital base, our production output will be drastically reduced. We, the  manufacturers depend so much on Forex to source our raw materials and so this policy will affect us negatively. This directive cannot be in the interest of local manufacturers because the local manufacturers of food items, especially the smaller players  do not have enough capital to sustain their businesses and  if government stops the forex it will adversely affect us.

The CBN on its part does not help us either.  Apart from not giving us any fund, the CBN does not give us loans at reasonable interest rate. They have a lot of terms and conditions which are not favourable to local manufacturers.  I can assure you that this policy will lead to closure of some factories if it is not reversed”

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He Cited Sonia Foods Limited, Lagos as one of the most affected local companies. Government policies, he argued “must be reviewed to stop making importation easier while those of us using local raw materials suffer. Even the importers who import concentrates to produce food  are enjoying government patronage  instead of  the local manufacturers that use natural raw materials. There should be a standard policy for those importing so that they will find it difficult to import those items we are producing here.

Another expert, Prof. Akpan Ekpo believed the directive will send wrong signal to investors

He said, “we may have food adequacy in the country meaning that we produce enough food for local consumption but we do not have sufficiency. We have to produce all kinds of foods and even export some, and then we can say we are sufficient.

“When we import food, we have to be careful the kind of food we import. For instance, we have in Nigeria a lot of foreigners who may not eat the kind of food we produce here; therefore, their kind of food should be imported into Nigeria. To do that, if we do not want to give them Forex, we are pushing them to source it from the open market. We need to carry out a detailed study before giving this kind of policy directive. By the president giving such directive, it brings to an end, the independence of the CBN.  If they have done it by sending a memo to the CBN to consider the position, it would have been better.  But by this way, it takes  us back to the military era.

“Again, this presidential directive may send wrong signal to potential investors, who might say if they come to Nigeria; they would not know what policy the government will come up with tomorrow and so stop investing in Nigeria.

The president should have allowed the CBN to carry out its own study and come out with its findings. By the way we are going; it will push importers to start smuggling into the country. That is why it is good to follow policy process so that we will not make a mistake at the end and the aim will not be defeated.

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The All Farmers Association of Nigeria, AFAN, on its part however lauded the president for the directive.

The Vice President, AFAN, Chief Daniel Okafor, said the order came at the right time and would go a long way to boost local farmers’ productivity and performance in sustaining the nation’s food security.

According to Okafor “the Gross Domestic Product, GDP, will tremendously increase, more income will be generated by farmers of various agric products, there will be increased market opportunities, and job creation for the teeming youth, hence the economy will be diversified”.