Data obtained from the Central Bank of Nigeria (CBN) indicate that the order to stop allocation of foreign exchange for food importation could save the country US$20 billion.
President Muhammadu Buhari on August 13, 2019 ordered the CBN to exclude importers of food items from accessing forex from official windows.
The CBN’s source, Nigeria saved around $21 billion in 2018 following the restriction of forex on 41 items. “With the addition of cotton, textile and garments, poultry, palm oil and their derivatives and other food/agricultural items imported into the country, it is expected that Nigeria will save more forex from the directive.
The National Bureau of Statistics (NBS) in its report said “the value of total imports rose 3.39 per cent in the first quarter of 2019 compared to the fourth quarter of 2018, and by 25.84 per cent over the corresponding quarter of 2018. From this figure, Imported Agricultural products were 7.98 per cent higher in value than in the fourth quarter of 2018, and 28.1 per cent higher than in the first quarter of 2018.
If these imports that consume forex is checked as directed by the President, an immediate benefit of the directive will be an accretion to the foreign reserve which now stands at over $44 billion. This increase in foreign reserve will help keep the Naira at an appreciable rate to the dollar and the CBN will be better equipped to defend the naira against forex volatilities.
Another positive implication of the directive is that there will be increased agricultural activities across all food segments to produce the basic needs and also all the value chains associated with every food item will be motivated to expand.
In other words, jobs and processes that were exported will now be domiciled in Nigeria. A fall out is more jobs and more food for Nigerians.