FOREX withdrawal for food importation will increase smuggling, says NECA


The Nigeria Employers’ Consultative Association (NECA), on Wednesday, warned that there would be unprecedented smuggling of food products because of President Muhammadu Buhari’s directive to the Central Bank of Nigeria (CBN) to withdraw foreign exchange for food importation.

The Director-General of NECA, Mr Timothy Olawale,      while reacting to the directive, told reporters in Lagos that although the directive might be well intended, it left much to be desired in the absence of a buffer time for adjustment.

According to Olawale, Nigeria currently lacks the capacity to meet its local food demand and the demand that will be created as a result of the directive will be through smuggling.

He said that given the fact that Nigeria recently signed the African Continental Free Trade Agreement (AfCFTA) intended to open up the borders, smuggling would become the order of the day.

”With the recently signed AfCFTA, Nigeria will further create a thriving market for other countries and will remain a dumping ground for imported goods.”

He said the implication of a ‘knee-jack’ action, was that “a wholesale immediate withdrawal of FOREX without giving a buffer period for businesses to adjust and source for alternatives would boost smuggling activities.

”This will have serious consequences for the economy.

“But we commend the president and indeed, the Federal Government for the numerous efforts at ensuring food sufficiency in the country and protecting local farmers.

The director-general said that the withdrawal of forex would decapitate businesses leading to loss of jobs and relocation of some businesses to neighbouring countries where they could without hindrance, bring the products to Nigeria under the cover of AfCFTA.

He said that the timing of the policy called for concern and that with consistent support and policy stability, local food production might meet demands and also provide foreign exchange through exports.

According to him, the reality is that Nigeria currently lacks the capacity for sufficient food production to meet local demand.

The NECA chief said that conserving foreign exchange through the withdrawal or ban of FOREX for food importation was not tenable.

Olawale said that if Nigeria was desirous of conserving foreign exchange, government would do well to stop the allocation of FOREX for the importation of petroleum products and ban medical tourism to aid investment in Nigerian hospitals.

He said that the government should also withdraw FOREX for payment of tuition in foreign universities to enable the resuscitation of the perpetually under-funded Nigerian universities, among others.

“The reality of lack of capacity to embrace these other wholesome reforms is true of the situation with insufficient capacity presently for food production,” he said.

The NECA boss argued that “rather than withdrawal of FOREX on food importation and indeed, milk importation, a gradual withdrawal with a buffer period of not less than five years should be given.”

He said that this would ensure proper and strategic implementation of government’s agricultural promotion policy that was established less than five years ago.

Olawale said that government should also resolve the myriad of challenges facing the food production value-chain, including the distribution system for fresh foods, post-harvest losses due to a lack of storage system as well as the security challenges and the menace of herdsmen. 


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