CBN’s maize import waiver and food security – Punch

The waivers recently granted by the Central Bank of Nigeria to four companies to import 262,000 metric tonnes of maize cast a pall over efforts to achieve self-sufficiency in the staple and continue the predilection of the government for policy violations. In a move that caught farmers and the business community unawares, the CBN not only interrupted a subsisting ban on maize imports but also committed to selling foreign exchange at a discounted rate to the four lucky firms who are to enjoy the privilege for three months — August to October. This is wrong-headed.

A purpose-driven policy should not be bent at the first sign of trouble: long-term benefits to the economy should be the guide. The CBN fails to understand that shocks and shortfalls enable countries to adapt, surmount adversity and fashion lasting solutions to problems. The apex bank should critically weigh the fleeting rewards against the ultimate goal of achieving self-sufficiency in maize and other staples.

Blessed with arable land of over 34,000 hectares that support a diversity of food and cash crops, Nigeria should have no business being dependent on food imports. Food imports cost $4.1 billion in 2017, said the National Bureau of Statistics, down from the CBN’s figure of $7.9 billion in 2015. Food security is vital for any country’s development, says the United Nations Committee on Food Security, where “all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food that meets their food preferences and dietary needs for an active and healthy life.” To arrest rising poverty and joblessness, the federal and state governments must therefore invest massively in agriculture.

The resort to waivers and concessions to import maize is embarrassing and confirms the country’s notoriety for spending prodigiously importing products in which it is richly endowed. Nigeria overtook South Africa as the continent’s largest producer of maize, said the United Nations Food and Agricultural Organisation, harvesting 16 per cent of Africa’s 75 million tons in 2018. It was listed at 12th largest global producer in 2018. The CBN had only in July stopped approving forex sales for the import of maize in line with policies to increase local production, stimulate recovery in the wake of the COVID-19 pandemic-induced meltdown, conserve reserves and boost support jobs. Since 2016, the CBN had also imposed direct forex sales on 41 items, while imports of rice, wheat and cassava had been similarly restricted. The President, Major General Muhammadu Buhari (retd.), has also restated his opposition to food imports and ordered the release of 30,000MT of maize from the Strategic Grains Reserve.

But the apex bank justified its move by citing shortfalls in maize harvests, down to 10.5 million MT at a time demand rose to 15 million MT, and “in line with government policy on food security, sufficiency and striking a balance between food imports and local production capacities to meet the anticipated shortfalls.” Animal feed and poultry prices had also gone up. Still, granting waivers sounds like a lazy approach; for instance, farmers’ groups had earlier pledged to make up for expected supply shortfalls.

Maize, says the International Institute of Tropical Agriculture, is the most abundantly grown crop in the world, surpassing wheat and rice. It is a major staple but is also used for animal feed, cornstarch, syrup and alcoholic beverages and has lately gained great importance for making ethanol and biofuels. In the United States, the world’s largest producer, 85 per cent of its 366 million MT in 2018/19 is genetically modified maize. In Nigeria, it is also vital for animal feeds and is increasingly being processed as government’s efforts to protect local farmers and boost production yield results.

More than ever before, the federal and state governments need to roll out emergency plans, strengthen and harmonise ongoing programmes to achieve food self-sufficiency, diversify the economy and create jobs to withstand unexpected shocks. The oil price crash, recession and the ongoing global contraction offer abject lessons. Numerous programmes such as the CBN’s Anchor Borrowers Programme, Accelerated Agricultural Development Scheme, as well as interventions in cotton and other crops coupled with customs duty concessions for agricultural inputs need to be harmonised and reviewed to ensure that returns justify the financial outlay. Such cost-benefit analysis should be extended to federal programmes like the Agriculture Promotion Policy designed to transform farming practices from development-oriented to agribusiness-focused mode anchored on integrated value chains. Success in the faltering rice production revolution should be evaluated in light of huge sums expended; $165 million was spent to boost rice farming in November 2018, the BBC reported.

The CBN should step up efforts to meet its 10-year target for banks’ to increase lending to the agriculture sector from 1.4 per cent in 2011 to 7.0 per cent by 2021; it rose from 3.49 per cent in 2015 to 4.21 per cent in 2019. Crushing insecurity is central to achieving food self-sufficiency: The largest maize producing areas – North-East, North-West and North-Central regions that contribute 25.43 per cent, 22.9 per cent and 25.88 per cent respectively – are under siege from terrorists, bandits, kidnappers and Fulani militants.

Buhari should avoid a return to the much abused waiver system. The government admitted that it lost N797.8 billion to waivers and exemptions in the three years to 2013, while the Federal Inland Revenue Service said the country lost another N1.3 trillion through tax waivers to firms in only three sectors of the economy in the five years to 2020. The system has been prone to monumental corruption.

Nigeria needs a shock therapy to wean the national and sub-national governments off oil revenues whose volatile, but humongous flow since the 1970s has shifted focus from agriculture as the mainstay of the economy and created a rentier state. There should be consistency in policy implementation. The country’s fundamentals need to change urgently and purposefully to harness the full potential of agricultural, mining and human resources and transit to a complex, productive, knowledge and technology-driven economy powered by productive sub-national units.