Presidential spokesman Garba Shehu said Tuesday the move is aimed at improving Nigeria’s agricultural production and attaining more food security.
“The president … said the foreign reserve will be conserved and utilized strictly for diversification of the economy, and not for encouraging more dependence on foreign food imports bills,” reads the statement.
Shehu also quoted Buhari as saying, “Don’t give a cent to anybody to import food into the country.”
As a way of diversifying the country’s economy and reducing its dependence on oil, policies aimed at stimulating the growth of the agricultural sector have been put forward over the past years.
These policies are expected to reduce how much is spent on imports and encourage local production of goods.
The role of the central bank
But President Buhari’s recent instruction to the bank has prompted questions about how independent the CBN is and whether it will follow through with the directive.
Economic analyst Tokunbo Afikuyomi says making it harder for businesses to import food through official channels will push importers to find foreign exchange on the black market, further widening the gap between the official exchange rate.
“Making it harder for businesses to import food through official channels is likely to lead to higher food prices as businesses import using more expensive exchange rates or expensive domestic alternatives,” Afikuyomi told CNN.
He said Nigeria’s strategy should be to produce which foods it can cheaply and import others that are more expensive to make.
“Nigeria cannot produce all the food it eats — no country in the world is able to achieve this. Banning food imports to save foreign exchange is not the way to build a sustainable economy,” he added.
A need for supplementary policies?
Agricultural expert Ayokunle Afolabi Toye says a restriction on foreign exchange for food importers is a good move for local food producers to grow, but it needs to be supplemented with additional policies to be effective.
“I think it’s an excellent move to support agriculture but there needs to be a guarantee first that Nigeria can feed itself from its own production,” he said.
Afolabi Toye, an associate professor at the Faculty of Agriculture in Nigeria’s University of Ilorin says fundamental issues such as low crop yield need to be addressed alongside the policy.
“Beyond encouraging the country to be more productive, there should be an enabling environment for local agriculture to thrive in. There should be strategic reserves and infrastructure in place,” he told CNN.
The directive to halt foreign exchange for imports of food is a direct clash with that agreement, which is supposed to boost intra-Africa trade by creating a single market for Africa’s 1.2 billion people.