Nigerian President Muhammadu Buhari is coming under fire after calling for the central bank to stop providing the foreign currency needed to pay the country’s vast food import bill. Mr Buhari this week “directed” the central bank to cease providing dollars and other currencies to importers as part of his efforts to spur domestic agricultural production and attain “full food security” for Africa’s most populous nation.
But he drew withering criticism from economists and analysts who said the move threatened to send food prices skyrocketing and brought the central bank’s independence into question. Since 2015 the central bank has enforced a controversial policy that denies foreign currency for dozens of imported products from cement to toothpicks to rice, but Mr Buhari’s call would represent a vast expansion of the prohibition.
“Don’t give a cent to anybody to import food into the country,” the president said, according to a statement from his spokesman, who added that “the foreign reserve will be conserved and utilised strictly for diversification of the economy, and not for encouraging more dependence on foreign food import bills”.
The central bank has not said whether it will follow the directive and did not respond to a request for comment. Analysts said that instead of inspiring a renaissance of Nigerian agriculture, the foreign currency import ban would create food shortages, drive further smuggling, and send prices higher.
Amaka Anku, Africa director for the Eurasia Group, said that whether the policy was implemented or not it sent a troubling message for an economy suffering from high unemployment, low foreign direct investment and sluggish growth.
“Most actors, especially the central bank, should know that a total ban of food imports is not practical and I doubt that will be the policy,” she said.
“But his comments will continue to drive home the sense that Buhari has no idea how to manage an economy and will raise uncertainty about what other [foreign exchange] restrictions are coming, and contribute to already low business confidence.”
The central bank is led by Godwin Emefiele, who became the first central bank governor to be reappointed to a second term after Mr Buhari won re-election earlier this year. His reappointment was widely seen as a signal of the president’s approval of his handling of foreign exchange policy.
Nigeria’s foreign reserves have risen under Mr Emefiele, and he has pursued unorthodox policies aligned with Mr Buhari’s protectionist instincts. Soon after his reappointment, Mr Emefiele added milk to the list of items banned from forex. But Mr Emefiele has been dogged by questions about the bank’s independence.
Cobus de Hart, chief economist at NKC African Economics, said the president’s call for a currency ban raised more “serious concerns”.
Mr de Hart said it also cast doubt on Nigeria’s commitment to a landmark continent-wide trade agreement, which it signed last month after more than a year of delay.
The move “stands in stark contrast to the strategy outlined in the Africa Continental Free Trade Area agreement, and this policy will certainly not set Nigeria’s agricultural sector up to take full advantage of a liberalisation of trade barriers across the continent,” Mr de Hart wrote in a research note.
A senior executive in the commercial capital Lagos said Mr Buhari had approached forex policy similarly when he was military dictator in the 1980s.
“The main difference is that in 1984 the central bank was more or less a department of the ministry of finance, and today the central bank is nominally independent, at least constitutionally,” the executive said.
“But [it seems] that as far as the president is concerned the central bank is not independent.” Mr Buhari has long touted the success of the forex import ban on rice in particular, claiming that Nigeria no longer imports rice. But critics point out that markets across the country are flooded with Thai rice smuggled in from neighbouring Benin.
