BusinessDay

How FG’s FX ban on food imports will squeeze Nigerian consumers

…will pay more for bread, noodles, semo among others …food inflation to spike

In Isawo town of Ikorodu Local Government area of Lagos state is a small shop belonging to Fatima Adegoke a 49 years old widow and a mother of five.

Challenged by the harsh economic situation in the country and the sudden death of her husband, Fatima who is a seamstress could barely feed her family as she earns hardly enough income to support them.

Her and her children feed twice daily on mostly wheat based food products to survive.

“My children feed only twice a day because it’s being really tough for me. I struggled to provide them with bread or noodles they eat daily before going to school,” Fatima says.

Nigeria is now the headquarters of poverty as 98 million of its population lives below poverty line, according to the World Poverty Clock recent data.

Fatima, like most Nigerians who feed daily on what they can find to satisfy their hunger needs, has been driven by poverty to consume a single staple food-which cannot provide the essential vitamins and minerals for a healthy living especially for her children’s development.

Now, they will have to pay more for such food products as the Federal Government has ban FX for importers of food items.

Bread, biscuits, noodles, semo and spaghetti among others are all made from wheat and Nigeria imports 90percent of the commodity for the production of other food items.

With the FX ban, importers will have to source their dollars outside the official window at a higher cost to import; this translates to higher cost of production which will be transferred to the consumers.

Experts say the policy would worsen the country’s food insecurity and add more items to the list of things priced out of the reach of millions of Nigerians while accelerating Nigeria’s food inflation rate currently at 13.35percent.

“Banning FX to importers of food will translate to increase in food prices and the consumers are the worst hit as we do not currently grow enough food to feed our people and industries,” said an economist who does not want his name mentioned on print.

“Most of our agricultural products that manufacturers’ make use of in production are not price competitive as imported ones are cheaper. The manufacturers would have to transfer that extra cost to the consumers of their products” he said.

Nigeria is populated by 200 million people who must be fed with staple foods including yams, rice, cassava, beans, plantains and tomatoes.

However, there is an increasing demand-supply gap in most of the staple foods, even as the population growth rate stands at 2.6 percent per annum. Nigeria’s population is projected to surpass the 300 million mark by 2050, according to The World Population Prospects 2017.

The country imports wheat, rice, tomatoes, mangoes, fish, and pineapples among others to meet up with the short fall. The FX restriction for importers of some of these food items has fuelled smuggling across the country’s porous borders.

Nigeria had in 2016 placed an FX ban on a list of some 43 items of which about half accounts for some food items among which are rice, vegetables, poultry products, turkey, palm oil, tomato paste and palm oil among others.

Since the ban on rice imports, the country is still struggling to stabilise local production as the policy has enriched Benin Republic. Foreign variety of rice has continued to gain access into the Nigerian market through smuggling at a higher cost for consumers despite the ban, forcing many small businesses to close shop.

“We need to worry about the implications of policy pronouncements for investors’ confidence and the general sentiments of investors. We need to worry about the signalling effect,” said Muda Yusuf, director general, Lagos Chamber of Commerce and Industry (LCCI) in a statement to BusinessDay.

“If policy and regulatory risks continue to escalate as we are currently experiencing, the chances of stimulating investment, whether domestic or foreign, would remain dim,” Yusuf said.

He added that the current forex policy conceptualisation and management are adversely impacting investment in the country.

Also speaking, Temitope Oshikoya, CEO, Nextnomics Advisory said “the Federal Government efforts should focus should on increasing FX supply by looking at boosting productivity and not focusing on its demand.”

 

Josephine Okojie

 

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