Market News

BY  Anne Oboho

Nigeria has continued to witness galoping imports despite a ban on 41 items by the Central Bank of Nigeria initiated five years ago.

CBN, in 2015, excluded importers of 41 goods and services from accessing foreign exchange at the Nigerian foreign exchange markets.

In a circular released in June 2015, the apex bank stated that the policy was an effort to sustain the stability of the foreign exchange market and ensure the efficient utilisation of forex and derivation of optimum benefits from goods and services imported into the country.

The bank noted: “It has become imperative to exclude importers of some goods and services from accessing foreign exchange at the Nigerian foreign exchange markets in order to encourage local production schemeof these items.

“The implementation of the policy will help conserve foreign reserve as well as facilitate the resuscitation of domestic industries and improve employment generation.” 

Experts have argued that contrary to the expectations of the apex bank, the reverse has been the case since the policy implementation kicked in.

For instance, an economic professor in the University of Uyo and a former director at CBN, Emmanuel Onwioduokit, maintained that the ban on 41 items had done nothing to improve the forex situation in Nigeria.

“It has instead become worse. When the policy was put in place, the exchange rate of naira to a dollar was N197, today, it is approaching N600.

“Scores of local industries have shut down and scores have relocated operations to places like Ghana, Ivory Coast and even Republic of Benin behind our backyard here.

“It may have been well intended, but it is obvious that it has achieved the very opposite of the objectives it was meant to achieve,” he noted.

Among the items that featured prominently on the list were some agricultural produce that government felt Nigeria had the capacity to produce and be self-sufficient in.

However, reports by the National Bureau of Statistics have suggested that agricultural imports are on the top of the list of imports of the last three years.

In its third quarter report for 2021, NBS stated that total imports was 17.32 per cent higher than the previous quarter and 51.47 per cent higher than the previous year. 

The value of imported agricultural goods was 21.01 per cent higher than the value recorded in the second quarter and 74 per cent higher than the corresponding quarter of 2020.

“As you can see, the import growth is galloping every year. If you study the trend over the past four years, you will observe that imports have not dropped,” Onwi remarked.

Another expert, Akpan Ekpo, a professor of Economics and Public Policy and Chairman of the Foundation for Economic Research and Training, placed the blame on the country’s inability to deploy technology and mechanisation in farming. 

He noted that most of the agricultural practice in Nigeria was still manual adding that without full deployment of mechanization, it would be difficult for the country to make a headway in the agricultural sector. 

Ekpo, the former Director General, West African Institute for Financial and Economic Management, stressed that in advanced economies, only a handful of farmers feed millions of people.

“Nigeria needs to get to a  point where people stop using their hands and start using technology in farming.” 

On his part, Mr. Segun Awolowo, the Executive Director of Nigeria Export Promotion Council, decried the practice of exporting raw agricultural goods, saying that the value of the raw goods was very low compared to the value of refined products. 

He said: “I encourage Nigerian exporters to export more finished products because that is where the money is. Raw cocoa for instance, attracts less dollars than chocolates and other products made from cocoa. 

“The reason for the high incidence of rejection of agricultural exports is because the items are mostly raw and easily perishable. By the time you spend days navigating the congested roads to Apapa port and the perishable agricultural item finally gets to its destination, it is no longer acceptable because it has gone stale. 

“We need to start exporting finished goods instead of the raw ones.”