March 28, 2023

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Despite Buhari’s forex ban, food imports gulped $1.04bn in six months

The foreign exchange supplied by the Central Bank of Nigeria for the importation of food products into Nigeria rose by 23.81 per cent to $1.04bn in the first half of this year, compared to the same period of 2020.

Food imports gobbled up $840.18m in H1 2020, down from $1.02bn in the same period a year earlier, according to the CBN data on sectoral utilisation for transactions valid for forex.

Although President Muhammadu Buhari had in September 2020 directed the CBN to stop issuing forex for food and fertiliser imports, data from the apex bank showed that $709.07m was utilised for food products imports in the last quarter of 2020.

Buhari gave the directive at a meeting of the National Food Security Council at the Presidential Villa, Abuja, saying that firms that were bent on importing food should source their forex elsewhere.

“Nobody importing food should be given money,” he was quoted as saying in a statement from the Senior Special Assistant to the President on Media and Publicity, Garba Shehu.

The forex used for food products imports increased from $163.60m in January this year to $197.73m in February but declined to $171.05m in March.

The amount of forex used for the importation of food products fell to $156.30m in April and $135.76m in May but rose to $213.58m in June.

The CBN’s breakdown of sectoral utilisation of forex showed that food imports accounted for about 10.34 per cent of the $10.05bn utilised for imports in the country in H1 2021.

Amid the economic fallout of the COVID-19 pandemic, forex supply for food imports fell by 9.22 per cent last year to $1.87bn from $2.06bn in 2019, accounting for about 6.57 per cent of the $28.46bn utilised for imports.

The Monetary Policy Committee of the CBN said last month that it was concerned about the broad level of insecurity across the country, noting its impact on business confidence and overall economic activities.

It noted the persisting insecurity in key commodity-producing areas and urged the Federal Government to intensify security surveillance in farming communities to ensure uninterrupted farming activities.

Committee members expressed optimism about the likely moderating impact of the forthcoming harvests on food prices, saying this would contribute to the ongoing broad reduction in headline inflation.

“The CBN will continue to release maize from its strategic maize reserve directly to feed-millers as part of its strategic response to address rising food prices and moderate the price of maize across the country,” it said.

The apex bank, in June 2015, excluded importers of 41 goods and services, including some food products, from accessing forex at the country’s forex markets in a bid to conserve the external reserves as well as encourage local production of those items.

In December 2018, the CBN included fertiliser on the list of 41 items classified as ‘not valid for foreign exchange’ in the Nigerian forex market.

The central bank said in July 2019 that it had restricted the sale of forex on the importation of milk from the Nigerian forex market.