World Food Day, CBN And Lifting Of Forex Ban On Foodstuffs

Today is World Food Day – a day set aside by the United Nations to encourage action for the future of food, people, and the environment and awareness of hunger. Although this year’s celebration is centered around the theme: “Water is Life, Water is Food. Leave No One Behind,” what makes for cheaper access to food cannot detract from the discussion on a day like this.

Good for Nigerians, the day is coming on the heels of the Central Bank of Nigeria’s (CBN) lifting of the embargo imposed on access to the official foreign exchange (forex) by importers of some items. Out of the 43 items shut out of the Investors and Exporters (I&E) window, at least 10 of them are foodstuffs which prices spiked after the emplacement of the forex restriction some nine years ago. These items include rice, margarine, palm kernel, palm oil products, vegetable oils, meat and processed meat products, vegetables, and processed vegetable products, poultry and processed poultry products, tinned fish in sauce (Geisha)/sardine, as well as tomatoes/tomato pastes.

Owing to the raging forex crisis in the country that saw the naira sink to over N1,000 to the dollar at the parallel market, allowing importers of these foodstuffs to continue relying on Bureau de Change operators for foreign exchange will definitely soar not just their prices but those of local substitutes. This is even as the headline inflation rate which increased to 25.80 per cent in August was driven mainly by food and non-alcoholic beverages, as they constituted 13.36 per cent. In its Food Price Watch released a fortnight ago, the National Bureau of Statistics (NBS) detailed how the prices of rice, beef, tomatoes, beans, garri, yam and other food items rose astronomically in August.

The impact of this inflation on the population can be better imagined given that the World Food Programme (WFP) and the Food and Agricultural Organisation (FAO) some months back disclosed that over 24.8 million Nigerians will be at risk of acute food insecurity between June and August. In a joint report, they warned that “over 24.8 million people are projected to be acutely food insecure between June and August 2023, including 1.1 million people in emergency (CH Phase 4”. A grimmer picture was painted by the World Bank report on food security released last June which stated that about 64 million Nigerians were at risk of an emergency food crisis owing to the attendant effects of rising inflation, insecurity and climate change, among others.

Last year’s Global Hunger Index report ranked Nigeria 103 out of 121 countries, indicating the severity of the country’s hunger level. The report, which ranks countries by severity, gave Nigeria a score of 27.3 – a hunger level that falls under the serious category. Yet, it bears pointing out that these statistics don’t capture the entire story at least not the state of things as of today. A simple survey of the fluctuations in food prices in any nearby market will indicate the rising prices of some foodstuffs by above 50 per cent within the last three months. This was driven by the government’s removal of fuel subsidy on petrol.

The stimulus package meant to ameliorate the biting hardship is so miserable that stories abound on the internet of a half cup of rice being what could get around families as government palliative. It is therefore against this backcloth that Prime Business Africa welcomes CBN’s preparedness to grant concessionary forex rates for importers of these commodities. Rice, for instance, is a staple food in our country. Even if all Nigerians should go for the local paddy, it won’t be enough to feed the population. Yet, rice-exporting countries like India are now beginning to place a ban on the export of rice to guarantee food security at home.

This is part of the reasons importers should be rather encouraged to bring in the commodity and we believe that the lifting of the forex restriction is a good starting point. At least, more of the imports will checkmate the rising price that has now made rice out of the reach of the common man in that a bag of rice costs almost double the national minimum wage! If the lifting of the forex restrictions can be this beneficial to the agricultural sector, then the impact of the remaining 33 items on other sectors of the country’s economy can better be imagined.

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Granted that the CBN had to lift the ban to lessen the pressure on the Naira from importers seeking forex at the parallel market, we believe that this pressure will be eased further through the strengthening of the commodities exchange board and the provision of processing facilities to add value to farm produce for onward exportation. Most of what Nigerian farmers produce ends up perishing due to the dearth of better storage and processing facilities. The CBN which had involved itself with the anchor borrowers’ programme can equally intervene in this direction, even if for the sake of the forex to be brought into the country from the export of processed Agro products. Since the CBN announced mid-June that it had collapsed all forex windows into the I&E window, the naira has depreciated by over 50 per cent at both the authorized and unauthorized market segments selling for N1045 against the US dollar at the parallel market last Thursday.

Going by the widespread commendations that have greeted CBN’s lifting of these restrictions, we wonder why they were imposed ab initio as well as what was achieved therefrom. While Prime Business Africa appreciates that restrictions on imports or exports are a trade policy matter, the fiscal authorities must going forward decide on them after due consultation with the CBN, trade and investment stakeholders as well as industrialists. Admittedly, the Godwin Emefiele-led CBN may have meant well in denying concessionary rates to importers of those 43 banned items, yet the right things cannot be done the wrong way. As the world marks Global Food Day, Prime Business Africa agrees with the FAO that no one should be left behind since feeding is among the top three needs of mankind. We hope that this latest move by Nigeria’s apex bank will improve liquidity and stability in the FX market and lure the much-needed foreign investors. Of course, the pervasive hunger in the country will abate when these happen.

Prime Business Africa Editorial

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