Godwin Emefiele, the re-appointed Governor of Nigeria’s Central Bank, announced last week that President Muhammdu Buhari has directed the blacklisting of palm oil importers from Nigeria’s banking system as part of efforts to frustrate the importation of the commodity which remains high despite making it ineligible for foreign exchange since June 2015.
In the words of Emefiele, as reported by a newspaper, this is done because they “want to ensure palm oil production is aggressively increased in Nigeria.”
This “aggressive” drive to increase local production of palm oil in Nigeria took flight in June 2015, when the CBN restricted the importation of the commodity alongside 40 other essential items, and committed funds to supporting local farmers and industries.
While this move has indeed increased production quantity and boosted the sales of certain local products which barely have any ‘legal’ competition in the market, production of these goods itself has neither gotten better nor efficient.
There remains widespread scarcity in some case, and expensive final production cost, likely due to poor infrastructure, in other cases. Ultimately, the combination of these factors have sustained a double-digit food inflation for the most part of President Buhari’s first term and further impoverishment of the people who have to deal with soaring cost of food.
The restriction of palm oil import, for instance, was met with an immediate spike in price which has not abated. Similarly, despite all the concerted efforts to boost the production of Nigeria’s commonest staple, rice, the price of the food commodity when locally produced remains higher than imports. This perhaps accounts for the rise in smuggling, regardless of the murderous clampdown by Nigeria’s Custom service, as poor Nigerians simply want to buy quality food at a competitive price, without much care for the source.
A 2015 report by the United States Department of Agriculture showed that Nigerians spend nearly 60% of their household income on food. For context, citizens of Ireland, Switzerland and Austria all spend less than 10%.
This situation is not unconnected to the implementation of a policy which denies access to cheaper food sources, and has increased poverty for more than half of Nigerians who cannot afford rising food cost.
In the 2018 Global Hunger Index, Nigeria ranked 103rd out of 119 qualifying countries – an indication that this policy has achieved exactly the opposite of intended objectives.
Worse still, some economists have provided a link between the dominant spend of household income on food with the lull in Nigeria’s general economic growth. The rationale is that after buying food, majority of Nigerians have little or nothing left to purchase other goods or services available in the market. The erasure of purchasing power hinders business growth or expansion and discourages investment.
Yet, in the face of all these, the government is celebrating how much it has been able to “recover” from imports and the rise in local production. It is almost as if grandstanding is the ultimate goal, not the delivery of cheap and quality food to most Nigerians.
With this sort of behavior, no one would be wrong to say the intention of the Nigerian government, especially under the leadership of Buhari, is to promote poverty.