CBN, Nigerian Economic Group Clash Over President Buhari's Economic Policies

The Central Bank of Nigeria (CBN) and the Nigerian Economic Summit Group (NESG) clashed over the current economic policies of President Muhammadu Buhari, which the NESG said is making Nigerians poorer. However, the CBN said the policies have done the opposite.

According to the CBN, the policies of the government prevented Nigeria from experiencing a major food crisis during the major outbreak of COVID-19 and the lockdown of the economy. AllNews recalls that the CBN had placed more than 41 items on a forex banned food list that can't be imported into Nigeria.

CBN Counter NESG On Policy Affecting Supply/Demand Rate

Rice and maize, which are some of the most consumed food items in Nigeria were also banned from items that will get forex for importation - this has led to price hike and affected availability of the food items in Nigeria due to households and commercial demands.

The decision has limited the number of food importation in Nigeria, and the NESG said there's a huge gap between the food items Nigeria produces and the demands of Nigerians. There have been calls for Nigeria to lift the border ban, but the government has continued to ignore the request despite high inflation in food prices.

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CBN, NESG Disagree Over Financing Agriculture

NESG said the huge disbursement by the CBN to farmers have done little to resolve the gap between supply from local farmers and demands because credit is not the answer to the situation. But CBN said finance is not the only support being provided by the apex bank.

CBN also stated that central banks of other countries are deploying the same support, “We are comforted by the NESG’s reluctant admission that many Central Banks around the world are also engaging in similar actions,” the statement read.

“It is important for the NESG to note that our intervention programmes in the agricultural sector were a key contributor to the resilience of the agricultural sector during the crisis, as the sector experienced positive growth of 1.6 percent in the second quarter of the year despite the lockdown.

“As the NESG may be aware, as a result of the COVID-19 pandemic, Vietnam, Cambodia, India, and Thailand placed export restrictions on the exports of critical food items, including rice and eggs. With these disruptions, the Nigerian economy could have faced a major food crisis, but for the government’s intervention programmes in the agriculture sector.

“By alluding to the fact that money cannot address constraints in the agriculture sector, the NESG failed to realize that access to credit is listed among the three major challenges faced by farmers and businesses in Nigeria,” CBN said.

The Apex bank added that as of August 2020, NGN59.12 billion has been disbursed to 103,189 beneficiaries through the NIRSAL Microfinance Bank, for development production. It also stated that due diligence is done before the funds are disbursed, “The PFIs expend extensive due diligence on these intervention loans as the risk of default lies with them."

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CBN Defends Border Closure

Border closure is one of the factors that caused a price hike in food items produced locally in Nigeria. The border has been closed since October, with many Nigerian businesses negatively affected by the decision. Foreign companies have also been impacted as well.

Despite pleas from some African leaders, Nigeria's border has remained closed. The CBN said it doesn't oppose the reopening, however, some factors led to the decision which could have affected Nigerian farmers significantly.

In the CBN statement signed by CBN's director of corporate communications, Isaac Okorafor, activities like smuggling of fake products, drugs, small arms, and agricultural items have been sabotaging the economy pre-border closure.

CBN explained that the Benin Republic imports as much rice and frozen chicken as China and the United Kingdom respectively, and some of the products end up in Nigeria, “In which country does the NESG think all these rice and chicken end up? How then can a Nigerian rice farmer or poultry owner survive?” CBN said.