The Central Bank of Nigeria (CBN) policy restricting forex supply to importers of rice and other selected items, intended to preserve the value of the naira, is hurting the economy and negatively impacting on port operation.
It would be recalled that the CBN on Tuesday 23rd June 2015 officially stopped the official sale of dollars to the importers of some 41 select items, in the quest to reduce pressure on the naira and preserve the country’s external reserves.
These items include rice, cement, margarine, palm kernel/palm oil products/vegetable oil, meat and processed meat products, vegetable and processed vegetable products, poultry –chicken, eggs, turkey, private airplanes/jet, Indian incense, tinned fish in sauce – geisha/sardines, cold roiled steel sheet and galvanised steel sheets.
Others are roofing sheets, wheel barrows, head pans, metal boxes and containers, enamelware, steel drums, steel pipes, wires, rods, wire mesh, steel nails, security and razor wire, wood particles boards and panels, wood fiber board and panels, plywood boards and wooden doors.
In addition, sourcing of foreign exchange through the official window for the importation of toothpicks, glass and glassware, kitchen utensils, tables, textiles, woven fabrics, clothes, plastic and rubber products, soap and cosmetic, tomatoes/tomato paste and Eurobond/foreign currency bond/share purchase was prohibited.
The apex bank while the above-listed items have not been banned, their importers would have to make transact business “without any recourse to the Nigerian forex market”.
“We will try as much as possible not to hurt your business, but we need to be able to work together,” CBN governor Godwin Emefiele told a gathering of business executives at the outset of the policy.
But the CBN’s policy is hurting the businesses of several industries and has not served the purpose of strengthening the naira. Port operations and government are hurting even as the local currency continues to suffer a free fall.
While we do not support the unbridled importation of items like toothpick, tomato paste and other frivolous items, there are some essential commodities that must be exempt from this policy. One of such commodities is rice. This is because Nigeria is not self-sufficient in rice production and must therefore augment local production with importation to prevent mass hunger.
The exclusion of rice importers from accessing foreign exchange from Nigerian markets could stoke up rice prices in the country. It must be noted that rice is one of the few staple foods easily affordable by the common man.
Statistics from the Federal Ministry of Agriculture and Rural Development shows that Africa’s biggest economy consumes about five million metric tonnes of rice annually while local production is less than one million metric tonnes annually. The gap must be filled by importation additional four million metric tonnes annually.
Like the previous policy which imposed 10% duty and 100% levy on imported rice, the new CBN policy will further fuel smuggling of the staple food into Nigeria.
Importers will land the cargo in ports of neighbouring countries, especially Cotonou Port, and smuggle in bits and pieces into Nigeria. That is why rice importers must be allowed to access forex on the official market. The duty on rice must also be slashed to encourage its direct importation through our seaports. As it is, our ports are hurting and have lost all their rice cargo to Cotonou, Benin Republic.
Manufacturers have also cried out over the negative impact of the policy especially as it has telling effects on the importation of some raw materials caught in the web of the CBN order.
President Muhammadu Buhari must therefor fulfill the promise on Wednesday October 7, 2015 to rejig the policy.
Represented by Vice President Yemi Osinbajo, he said, “We are going to have negotiations with the operators of the manufacturing sector to seek ways on how foreign exchange control can be eased to enable the items that are not eligible for foreign exchange to be covered.”
The review must be done now to save the economy from collapse.
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