Reducing the importation of processed food items
“In order to go into any form of production in Nigeria, you have to create a mini-state: your own security, your own water, your own electricity, your own roads,”
– Dimieari Von Kemedi
The news headlines tell the story, at least part of it. That is, of the increasing gap between available raw food items in Nigeria and the related processed types we import on yearly basis. For instance, there are ones such as ‘Food imports gulped $1.04bn in six months, says CBN’, ‘Why Nigeria has restricted food imports’, ‘Would restricting food imports boost local production?’ Others include ‘820 manufacturing companies close down in 9 years- MAN’, ‘Nigeria still imports 1.6m tonnes of sugar and 97 percent of the milk that we consume’. These should be enough food for thought for our policy makers and those who implement such Food Security is very critical for the socio-economic development and growth of any country’, according to Kojo Brifo, Managing Director of Freddy Hirsch Nigeria and West Africa.
The paradox of a country which the World Trade Organization (WTO) had a few years ago ranked Nigeria as the largest food market in Africa yet the gap between locally produced raw foods items and processed ones is alarming. It is worthy of note that Dr. Akinwunmi Adesina who happens to be the president of the African Development Bank AfDB had made a similar prediction on the huge potential of Nigeria’s food production capacity years from now.
Similarly, according to IMF and PwC estimates Nigeria has the potential to be the fastest growing economy in Africa with a projected annual GDP of 4.2% within the 2016-2050 period. In fact, it is interestingly, that Nigeria’s GDP will be the 14th largest by 2050 while its population is expected to become the 3rd largest in the world ahead of the USA.
Currently, the food and beverage sector is estimated to contribute 22.5%of the manufacturing industry and 4.6% of the GDP. According to the CBN Nigerians spend an average of 73% of their income mainly on food and beverage products. But worrisome is the skewing of such spending on imported food items.
For instance, Nigerians spent over N508bn on the importation of sundry processed foods and beverages in the first half of 2021 according to the National Bureau of Statistics (NBS). That is compared to N686bn spent over the 12 months of 2020. Nigeria spent N767bn worth of imported processed food items in 2020, contributing 3.57percent of total imports within the same period.
That is despite the CBN Anchor Borrowers intervention in rice production and that of 21 crops. According to the Governor of CBN Godwin Emefiele over N300billion was disbursed to companies operating in the southern states, including Lagos, Edo, Ondo, Ogun, Osun, Rivers, Ekiti, Bayelsa and Cross River.
The growing concern therefore, is how to stem the tide and close the gap. But first we have to identify and highlight the underlying reasons behind the menace of the increasing import of foreign processed food items.Having noted that industrial production is the key to raising the living standards of the citizens, it means that Nigeria is far behind several countries even with lesser economic potentials.
In specific terms, the Harvard Economist, Dani Rodrik has written that development is virtually synonymous with producing manufactured goods for export. ‘’Studies of Asian economic success stories — from Japan, South Korea, Taiwan, Singapore, China, Malaysia and more recently Vietnam and Bangladesh — have found that building a competitive manufacturing sector is the fastest way for a country to climb the productivity ladder and raise living standards’’. So, what are the persisting challenges?
They are mainly infrastructure-based. Steady and affordable power supply as well as access roads and clean water, needed as catalysts in the manufacturing processes, are grossly lacking.This makes foreign investors to look elsewhere. And it compels companies with the wherewithal to compete “internationally and gradually raise productivity through investment in capital and skills: “Industrialising has been the key escalator that has enabled rapid growth.”
So, what is the way to go? Our governments and those who handle the economy should do away with policy flip-flops. For instance, although President Major General Muhammadu Buhari (rtd.), had in September 2020 directed the CBN to stop issuing Forex for food and fertiliser imports, data from the apex bank showed that $709.07m was utilised for food products imports in the last quarter of 2020.
Buhari had reportedly given the directive at a meeting of the National Food Security Council at the Presidential Villa, Abuja. His position was that firms that were bent on importing food should source their Forex outside the CBN. The foreign exchange supplied by the Central Bank of Nigeria for the importation of food products into Nigeria rose by 23.81 per cent to $1.04bn in the first half of this year, compared to the same period of 2020. It means that we are not walking the talk on reducing the alarming influx of processed food items.
If it was implemented the banned use of foreign exchange to import dozens of items would have had a positive impact as it has on rice production. But our focus should shift to encouraging local processing, reservation, marketing and consumption of food items. It does not make much economic sense for us to keep importing processed cocoa, coffee, cashew nuts, groundnut while we have the raw materials in abundance here. Yet, we buy them at exorbitant costs, just as we do with refined oil while the raw crude is exported from our shores.
According to the National Bureau of Statistics (NBS), the amount of our hard-earned money the country has been spending on importing processed food and beverages increased from 2015 to 2017, from nearly $2.9bn (£2.4bn) to $4.1bn. Though it reduced in 2018 it has escalated according to the earlier stated statistics.
Though basic food commodities such as wheat flour, fish, sugar, milk, palm oil, pork, beef and poultry are produced by the domestic farmers, they have not been able to satisfy the local demand of Nigerians. Growing insecurity remains a serious challenge which must be holistically tackled devoid of ethnic sentiments and politicking.
According to an agric economist, IdrisAyinde restricting food imports should be a gradual process since the country cannot yet meet domestic demand. Beyond that, we should be looking at the restructuring of the country with fiscal federalism so that the geo-political zones could focus their resources on the areas of their food production core competence. That is how it was with the cocoa resources-driven economy of the old Western Region. It was a similar scenario for that of groundnuts, hides and skin whose export sales assisted the Northern Region while rubber and palm oil drove the economyof the then Eastern Region.
As the business mogul, Aliko Dangote has rightly advised Nigeria should have no business importing processed vegetable oil much of which we can produce locally.
All said,this is the time for the local production of food machines to be encouraged. Much reorientation of the consumption choices of Nigerians in favour of locally processed food items should be carried out. With all these done, the mass importation of processed food items will be drastically reduced to stimulate our economic growth.