Outrage as CBN gives 4 foreign firms nod to import maize

There is outrage among farmers around Nigeria after it was revealed that the Central Bank of Nigeria (CBN) has granted a waiver to four foreign firms to import 262,000 metric tons of maize barely weeks the apex bank announced a ban on the importation of the commodity to spur domestic cultivation.

The companies – Wacot 60,000 tons; Chi Farms 60,000 tons; Crown Flour 22,000 tons, and Premier Feeds Mills 120,000 tons – were also assigned the rare privilege of banks that have been instructed to facilitate their foreign exchange requirement.

The central bank waiver approval was revealed in an August 6 memo by TM Isa, a deputy comptroller-general of Nigeria Customs Service, listing the four companies and seeking compliance by Customs men at the ports.

It is not unclear why it is not the Federal Ministry of Agriculture that is co-ordinating this and the CBN itself has not said if it consulted with key stakeholders before this selective reversal, how the four firms were selected and why the CBN did not mount a fair, transparent and well-advertised bid process for the selection of the lucky four firms that had been granted this controversial waiver.

The one-page memo written on behalf of Nigeria’s comptroller-general of Customs, was titled, “Re: Importation of maize and corn into the country,” said the move was to “meet anticipated shortfall.”

The apex bank, which had granted a total of N73.24 billion in credit to maize farmers in the last five years, sought to gain national limelight when in its July 13, 2020, memo it announced the sudden ban of the importation of maize “as part of efforts” it said, “to increase local production, stimulate a rapid economic recovery, safeguard livelihoods and increase jobs.”

Kabir Ibrahim, national president, All Farmers Association of Nigeria (AFAN), called the CBN action ‘shocking and destructive.’

According to Ibrahim, “This is just coming immediately after the CBN announced that forex would not be available for anybody to import maize. So, we don’t know how this violation by the CBN will be taken by the generality of Nigerian farmers.”

Bello Dogondaji, national general secretary, Federation of Agricultural Commodity Associations of Nigeria (FACAN), said, “Any policy against importation is welcome because it means home production is encouraged. It also raises hopes of Nigerian farmers. This backtracking as demonstrated by the CBN dashes the hopes of the same farmers.”

It is believed that by October when the 262,000 metric tons of maize would have arrived Nigeria, local farmers would be concluding their maize harvests, especially in the North where the bulk of maize used by industrial consumers is produced, and this is bound to create a flood in the market and may lead to price collapse.

“Several people are disappointed that it is happening. The farmers are really disturbed that this kind of thing should happen,” Ibrahim said.

The initial announcement of forex restriction by the CBN had been met with mixed reactions of support and opposition, with the poultry industry claiming the import restriction could lead to the collapse of the poultry sector owing to expected insufficient maize supply required for animal feed.

A CBN source told BusinessDay, “We are spending a lot by way of credit to local farmers and have no interest in seeing more imports. This was the motivation for stopping the imports … we now expect the huge investment that has been made over the last five years to start yielding fruit.

“However, these four companies are only being allowed to complete the importation process that had started before the ban. And so far this year, 314 Forms M have been processed for maize importation alone.”

However, maize farmers on their part insist the country could produce enough to meet both human and animal feed demand, and they now say the flip-flop by the apex bank showed it did not think through the initial policy nor did it held wide consultations.

“When the pronouncement was made, I was on our radio programme and I said to farmers don’t go and plant corn on this basis of this ban for you will fail,” said African Farmer Mogaji, chairman, Agric & Agro-Allied Group, at the Lagos Chamber of Commerce and Industry (LCCI), in a phone interview.

“In terms of confidence, it affects a lot of players in the private sector who took the word of government to rush into the sector,” he said.

At the price of N150,000 per ton, the 262,000 tons of maize is valued at N39.3 billion and that is the sum that should have been earned by local farmers.

Ayodeji Balogun, CEO of AFEX, a leading commodity trading platform in Nigeria, had told BusinessDay in an interview when the import restriction was announced that the country could muster enough local capacity to meet consumption requirements.

He cited FAO data showing that Nigeria’s local maize production in 2018 stood at 11 million metric tons (MMT), while consumption was 11.4MMT, leaving a 400,000 ton deficit, about 4 percent.

The data, he further explained, suggest that on a monthly basis, about 950,000 tons of maize is consumed in Nigeria and if the deficit is about 400,000, statistically it means a deficit of about two to three weeks. In his analysis, this deficit often occurs in October before the new harvest comes out in November.

Emmanuel Ijewere, vice president, Nigeria Agribusiness Group, expressed the view that the situation had “brought to the consciousness of people, the shortage and importance of maize in Nigeria,” and also thinks it would incentivise more people to now invest in it.

According to a university professor who spoke with our reporter, “The price of maize has been on the up in Nigeria. So, let us assume this waiver was intended to expand availability and stabilise price, but the way it has been handled is the cause for the disaster we have on our hands today. If the CBN had consulted widely as it should, it would have found a better way of achieving the same objective.

“But it did not and I am afraid, we are increasingly seeing dictatorial tendencies by this CBN as it seeks to impose its authority all over the place, whether it is arts and culture, aviation, agriculture, healthcare and technology.”

“When there is policy inconsistency, investors are always very afraid,” said Bolarin Omonona, an agricultural economist at the University of Ibadan, saying, “You can imagine people who were already planning to invest, for instance, based on the forex restriction that would ultimately have led to reduction in the importation of maize into the country.”

People planning to invest in it are already discouraged, Omonona said, explaining that if they had started investing by way of planning or committed (funds) to it, that would have amounted to a loss because maize would come in at a cheaper price.