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Nigeria’s president tells Central Bank to stop funding for food imports

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Nigeria's president tells Central Bank to stop funding for food imports
Image Ref: Reuters Africs

Nigerian President Muhammadu Buhari advised the central bank to stop funding food imports, a move that raised concerns about the bank’s independence said his spokesman in a statement on Tuesday.

Nigeria, with the largest economy in Africa, is the top oil producer in the continent and depends on crude sales for about 90% of its foreign exchange. Low oil prices resulted in a 2016 recession from which the nation arose two years earlier.

Since Buhari first took office in 2015, Nigeria’s central bank has chaired policies directed at boosting agricultural sector development to decrease oil dependency.These strategies included a 2015 ban on foreign exchange access for 41 products that the bank thought could be manufactured in Nigeria.

Tuesday’s statement stated that the President Muhammadu Buhari said he had instructed the Nigerian Central Bank (CBN) to stop offering foreign exchange for food imports into the nation.

Don’t give a cent to anybody to import food into the country,” Buhari said, according to the statement, which said that the call was in line with efforts to bring about a “steady improvement in agricultural production, and attainment of full food security”.

He said that the foreign reserve will be preserved and used exclusively for economic diversification and not to foster greater reliance on foreign food import bills.

The recent move comes just weeks after Central Bank Governor Godwin Emefiele said the bank would prohibit foreign exchange access for importing milk in July.

The statement of Tuesday led many observers to point to the status of an independent body of the central bank.

Kingsley Moghalu, who served as deputy central bank governor from 2009 to 2014 said that the 2007 Central Bank Act makes it clear that the bank is autonomous. He said that it is not intended to take direct instructions from the politicians.

The trajectory in this administration is that we have seen a very clear tendency for the president to direct people. Increasingly Nigeria’s institutions have lost independence,” said Moghalu, who was a contender in February’s presidential election.

Also, Bismarck Rewane, an economist and head of Financial Derivatives consultancy based in Lagos, said the bank should be independent. A spokesperson for central banks did not react promptly to phone calls and text messages requesting comment.

After Buhari signed the African Continental Free Trade Agreement (AfCFTA) last month, Rewane said a curb on foreign exchange for food imports might backfire. That agreement aims to build a continent-wide free trade zone that would eliminate tariffs on most products.

Import controls on rice, which were imposed even when local farmers failed to satisfy demand, held prices artificially high and led to smuggling into Nigeria from neighboring Benin.

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