President Muhammad Buhari ordered the Central Bank of Nigeria to stop providing Food Imports foreign exchange support fot the importation of foods into Nigeria. As released by Garba Shehu in a statement;
“Don’t give a cent to anybody to import food into this country.”
While reacting to this directive, Taiwo Oyedele, A West Africa Tax Leader and a member of PwC Global Board for leadership Development. He is also a member of the ministerial committee on the implementation of Nigeria’s National Tax Policy. Taiwo Oyedele listed 10 reasons, President Muhammad Buhari should give a second thought to this food imports foreign access.
As highlighted by Taiwo Oyedele; 10 Reasons Mr President should reconsider the Food Imports Foreign Access:
1- Nigeria is not food sufficient, available data suggests the contrary. Stopping fx allocation to importers of foods will have unintended consequences.
2- Every country imports food. Our focus should be on producing what we are best able to produce, export some and import the rest.
3- The CBN is meant to be independent, it should not be told what to do by the president especially when the decision is not evidence-based.
4- Restricting fx for food import will increase smuggling and push sub-standard imported food items under the radar.
5- The policy will push fx demand to the parallel market and restore multiple exchange rate margin leading to manipulation and arbitrage.
6- High fx rate in the alternative market will increase the cost of imported foodstuffs leading to high food inflation.
7- Less food at higher prices means more hunger, especially for poor people. Hungry people are angry people, and angry people are violent people so higher risk of insecurity.
8- Increased smuggling will result in less revenue from import duties leading to a higher budget deficit.
9- Self-sufficiency in food production cuts across the entire value chain including logistics, transportation, storage, etc. Restricting fx without first addressing these related problems is putting the cart before the horse.
10- Trying to fix all economic problems using monetary policy is like a carpenter trying to fix all broken furniture with a hammer and a nail, it doesn’t always work.