An Appraisal of the effect of the Ban of Maize Importation in Nigeria.
On July 13th, 2020, the Central Bank of Nigeria released a circular to Authorized Dealers and the General Public excluding maize imports from the official foreign exchange market. Consequently, banks are no longer allowed to process foreign exchange requests for maize imports. The apex bank gave its reason as the need to “increase local production, stimulate a rapid economic recovery, and safeguard rural livelihoods and increase jobs, which were lost as a result of the ongoing COVID 19 pandemic”. This qualitative restriction on the importation of maize has generated concerns for the general public and in particular, commercial consumers that use maize as a key input in their production processes e.g. poultry farmers and fast-moving consumer goods manufacturers. The restriction is touted as adding to the problems of poultry farmers due to the scarcity and expensiveness of maize.
These concerns are not unreasonable. In March 2020, maize sold between N85,000-N90,000 per ton at local markets in Karaye, Saminaka, and Makarfi all in Kaduna State, but currently sells for between N135,000 -N150,000 per ton in these markets. The COVID 19 Pandemic disrupted supply chains and increased the cost of inputs for many farming communities. Globally, the impact of the pandemic on economic activities is well known, and according to the FAO as many as “132 million people could face starvation as a result of economic recession triggered by the pandemic”.In spite of the aforementioned concerns, this article proposes that the combined effect of the exclusion on maize from the official foreign exchange market and the quantitative measures introduced by the Central Bank of Nigeria would position Nigeria to achieve sufficiency in maize production. According to the USDA, Nigeria imports around 400,000 tons of maize annually to supplement its local demand.
According to IITA, maize accounts for 30−50% of low-income household expenditures in Africa. Nigeria is the 11th largest producer of maize in the world, and the 2nd largest maize producer in Africa after South Africa. It is a staple food for about 50% of the Sub-Sahara African population. During the past two decades, maize has been recorded to be the fourth most consumed cereal in Nigeria. Also worthy of note is the contribution it makes to animal feed production in Nigeria, with over 50% of national output consumed by the poultry industry for the production of animal feed. According to the National Agricultural Extension and Research Liaison Services (NAERLS 2019) maize is the third most cultivated crop in Nigeria with an estimated harvested area of 6.03 million hectares, However, the average yield of maize farming in Nigeria was put at 2.09 tons/hectare by NAERLS in its Agricultural Survey Report 2019, this pales in comparison to averages of 8tons/hectare in Egypt (USDA 2018). Nevertheless, Nigeria has a high production potential for maize.
Agriculture is the largest employer of the population accounting for over 40% of jobs and the Nigerian Bureau of Statistics in its 2019 GDP report stated that Agriculture accounts for over 22.12% of Nigeria’s GDP, with crop production accounting for over 80% of the contribution. It is important to note that crop production is also dominated by smallholder farmers, hence improving efficiencies in crop production are of strategic importance.
Historically, increments in national production volumes have been driven by an expansion in the area of land cultivated and not an improvement in yields per hectare with access to finance, irrigation systems, storage facilities, and high-quality inputs being an obstacle for many smallholder farmers; productivity levels remain low nationally. As with every economic activity, improving efficiency and increasing productivity will lead to an increase in supply and a reduction of prices over time. This is the crux of the Federal Government’s intervention in the maize value chain as well as managing the country’s depleting FX reserves. The objective being to improve access to finance: it is expected that this would allow smallholder farmers to obtain high-quality inputs and agricultural services that would improve their productivity.
Thus, the Anchors Borrowers’ Programme (“ABP”) was launched in 2015 pursuant to the developmental function of the Central Bank of Nigeria (“CBN”) and due to the need for food security and the diversification of the Nigerian economy. The program was aimed at increasing the supply of certain agricultural products through the provision of monetary and other aids to smallholder farmers and the creation of a linkage between these farmers and anchor companies that engage in agro-processing. The crops under the program are Cereals (rice, maize, wheat, etc.), Cotton, Roots and Tubers, Sugarcane, Tree crops, Legumes, Tomato, Livestock, and commodities that may be introduced by the CBN.
The ABP is touted as one of the “most successful government interventions in recent history…” With over 200,000 smallholder farmers as beneficiaries of the N43.92 billion released by the CBN under the ABP and the creation of 3.5 million jobs, there is little wonder why the gap between the levels of local rice consumption and domestic production has reduced in the space of three years. In 2014, rice production was put at 6m tons but currently stands at 8.4m tons (NAERLS 2019). We can infer that there has been a positive shift in the standard of living of many rice farmers as a result of this policy.
It is also important to note the steps put in place by the government due to the COVID19 pandemic, in the form of a reduction in interest rates on funds under the ABP from nine to five percent.
In summary, we can infer that there has been a positive shift in the standard of living of many rice farmers as a result of this policy. We believe that it is a step in the right direction in helping us not just attain food security as a nation but in creating job opportunities and fostering economic development as well.
- https://www.cbn.gov.ng/Out/2020/CCD/Importation%20of%20Maze%20TED2.pdf [accessed August13th, 2020]
- CBN Maize Import ban ill-timed may cripple poultry sector, Nairametrics, available at https://nairametrics.com/2020/07/20/cbn-maize-import-ban-ill-timed-may-cripple-poultry-sector-university-don/ [accessed 3rd August 2020]
- http://www.fao.org/2019-ncov/q-and-a/impact-on-food-and-agriculture/en/ (accessed 13th Aug. 2020)
- Maize, IITA, Available at https://www.iita.org/cropsnew/maize/ [accessed 3rd August 2020]
- Maize Farming in Nigeria, Agridemy, https://agricdemy.com/post/maize-farming-nigeria [accessed 3rd August 2020]
- Anchor Borrowers’ Programme Guidelines, Development Finance Department Central Bank of Nigeria, available at https://www.cbn.gov.ng/out/2017/dfd/anchor%20borrowers%20programme%20guidelines%20-dec%20%202016.pdf [accessed 27th July 2020]Ibid.
- Obinna Ogbonna & Mark Itsibor, Nigeria: Impact of Anchor Borrowers Programme On the Economy – CBN Available at https://allafrica.com/stories/201903180065.html [accessed on 27th July 2020].
- OgeUdegbunam, Anchor Borrowers Programme: CBN to fund 1.6 million farmers for 2020 farming season, Premium Times. available at https://www.premiumtimesng.com/news/top-news/396888-anchor-borrowers-programme-cbn-to-fund-1-6-million-farmers-for-2020-farming-season.html#:~:text=The%20Central%20Bank%20of%20Nigeria,Anchor%20Borrowers%20Programme%20(ABP).&text=He%20said%20CBN%20had%20engaged,planting%20season%20through%20its%20ABP [accessed on 27th July,2020].