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."
A focus on local food production
Nigeria is currently Africa's largest producer of oil and relies on the sale of crude oil for about 90% of its foreign-exchange earnings. 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. A statement from President Buhari's official account also says boosting agriculture is a primary focus of the current administration.In 2015, the Central Bank of Nigeria (CBN) presided over a ban on the access to foreign currency for 41 items that the bank felt could be manufactured in the country, including rice and poultry. In July, it announced that it would stop importers of milk and other dairy products from getting foreign currency, arguing that local production of milk should be encouraged instead. According to the National Bureau of Statistics, imports of agricultural products were valued at ₦236 billion (about $640 million) in the first quarter of 2019. These policies are expected to reduce how much is spent on imports and encourage local production of goods.
The role of the central bank
A paper written by the CBN in 2012 concluded that the most effective way to conduct its policies is without any political influence. 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 Read More – Source