CBN: Propelling Agribusiness
Recently, the National President of Rice Farmers Association of Nigeria (RIFAN) announced that Nigeria’s nine million metric tonnes of rice a year has made her self - sufficient in the product and will soon place her in a position to begin to export the product.This means that Nigeria is now the highest producer of rice in Africa.
Not too long ago, the Central Bank of Nigeria (CBN), through its Anchor Borrowers Programme (ABP), unveiled rice pyramids in Kebbi, Gombe and Ekiti states.
Apart from rice, Nigeria has also witnessed the unveiling of the first maize pyramid in the country by the Maize Association of Nigeria (MAAN). All these are part of the drive to make the country self-sufficient in basic staples and guarantee food security.
These are all results of a CBN policy that placed a restriction on importation of certain goods and products, especially those the country can produce on its own.
As at 2014 Nigeria was spending about N1.3 trillion worth of foreign exchange on the importation of rice, fish, wheat and sugar.
The Central Bank of Nigeria in June 2015 issued a policy banning importers of 41 items from accessing foreign exchange at the Nigerian foreign exchange markets in order to encourage local production of these items. Subsequently, with the addition of fertilizer and textile products, the list grew to 43.
This action by CBN was taken in its efforts to sustain foreign exchange market stability and ensure the efficient utilisation of foreign exchange as well as ensuring that optimum benefit is derived from goods and services imported into the country. It was also intended to significantly grow the local economy particularly in the agriculture sector.
The CBN Governor, Godwin Emiefele, while defending the policy said, “Nigeria does not need to keep importing things she can produce. With dwindling income from oil, it was time the country took drastic steps to diversify the economy by supporting local production.”
Ever since, there has been a significant increase in the production of agricultural crops like rice, wheat, maize, millet, yam and many more as well as the growth of value chain actors in the areas of processing, packaging, marketing and transportation.
When the CBN announced the policy, many Nigerians, especially manufacturers cried foul. They described the policy as a ploy to kill local industries which at the time depended heavily on imported raw materials for their production.
Even the International Monetary Fund (IMF) opposed it saying it was making it difficult for foreign capital inflow into the country.
Six years down the line, Nigeria is already experiencing the positive impacts of that restriction.
Giving some data, the CBN governor, said, “Noticeable declines have been recorded in CBN’s monthly food import bill which declined from $665.4 million in January 2015 to $160.4 million as at October 2018; a cumulative fall of 75.9 percent and an implied savings of over $21 billion on food imports alone over that period.”
He said “a lot of progress has been made, but at the same time more needs to be done in order to ensure that we build an inclusive economy that supports domestic production of goods and services, while offering job opportunities to teeming Nigerians.”
The Anchor Borrowers’ Programme (ABP) which was created by the CBN to create a linkage between anchor companies involved in the processing and small holder farmers (SHFs) of the required key agricultural commodities, has created many value chain actors and wealth for the average small holder farmer. At harvest, the SHF supplies his/her produce to the Agro-processor (Anchor) who pays the cash equivalent to the farmer’s account.
Mr Emiefele said that the programme had created economic linkages between smallholder farmers and reputable large-scale crop processors, with a view to increasing agricultural output and capacity utilisation of integrated mills.
Commenting specifically on the restriction of forex on textile imports, National President, Cotton Association of Nigeria (NACOTAN), Mr. Anibe Achimugu, said the CBN has been very
supportive of the cotton industry. According to him, “The Central Bank of Nigeria (CBN) has so far invested over N120 billion across the cotton, textile and garment (CTG) value chain since its intervention programme in the industry began. Over 320,000 farmers had been financed between 2018 to date.
“I must tell you that this special focus on the industry by the CBN is a direct result of the restriction of forex for the importers of textile products. I support anything that will assist the textile sector to grow. As a country, we must putall hands on deck to ensure a vibrant textile industry.
“The truth of it is that if I have access to forex to bring in mostly second hand clothing, I don’t see how that will help our local textile industry. The policy by the CBN is a welcome action. It also speaks to the seriousness of the federal government’s commitment to revive the textile industry in Nigeria,” he explained.
Former Executive Secretary, Nigerian Shippers Council, Bar. Hassan Bello, said the policy has been a huge success.
“We can’t continue to be an import dependent economy. While containers come here laden, they leave here empty and this affects even the transportation cost. The policy of the CBN has provided a rise in non-oil export for the first time. It is a testimony of the diversification of the economy and the confidence we have in our own economy,” he said.
“Forex restriction on textile and others is not protectionism. It gives equal opportunities with our producers here as most of our textiles for instance, are smuggled into Nigeria. We had about 15 textile industries employing hundreds and thousands of workers. It’s just like steel in Pittsburg or automobile companies in America. Because of the American policies of looking inwards, there are a lot of restrictions of steel into America,” Bello said.
Speaking on the impact of the forex restrictions on oil palm, President of the Plantation Owners Forum of Nigeria (POFON), Mr Emmanuel Ibru, admitted that in the long run, and if all oil palm imports are routed through the ports with all duties accurately paid, the price of imported crude palm oil should be at per with that of locally processed one.
“And, if the policy survives the onslaught of pressures,”he added, the long-term implication could be aggressive investments in the agro-allied sector, economic growth and development and eventual food security and prosperity through improved Gross Domestic Product (GDP.”
Managing Director of Agropark, an agro processing firm, Shola Olunowo, explained that in response to the agro-economic policies, demand for locally processed chickens had improved drastically. He said affordable financial schemes for poultry farmers would enable them to scale up production, employ more farm hands and meet up with demand to avoid demand-induced inflation.
He explained that prevention of poultry smuggling is one of the best policies to stimulate local production so far, and that sustaining such a policy is desirable if the government actually wants the economy developed through agriculture.
President of All Framers Association of Nigeria (AFAN), Arc Kabir Ibrahim and that of the Manufacturing Association of Nigeria (MAN), Mansur Ahmed have also backed the policies, but with a caution to the government to put in place necessary infrastructure, especially power generation and availability, and other enabling environments to avoid counter-productive consequences. What this entails is that with discipline and sustainable policy the policy of food security will be achieved and enough reserved for export.