Naira Devaluation Fuelling Massive Regional Export – Govs

Naira Devaluation Fuelling Massive Regional Export – Govs

The Nigeria Governors Forum has said governors are implementing diverse strategies and measures aimed at resolving the ongoing economic challenges and food crises in their respective domains.

The NGF also said the devaluation of the naira was fuelling food export to West African countries.

The NGF, in a statement released by its Acting Head of Media, Halimah Salihu Ahmed, on Sunday, stated these while highlighting efforts by the governors to alleviate the pain and suffering of citizens nationwide.

Nigerians are currently grappling with economic hardship resulting from skyrocketing prices of basic household commodities.

In a bid to alleviate the hardship, in February, President Bola Tinubu held a meeting with state governors at the Presidential Villa in Abuja. During the meeting, the governors were urged to focus their efforts on resolving the economic and food crisis.

According to the NGF report, Kwara State Governor and NGF Chairman, AbdulRahman AbdulRazaq, along with Governors Agbu Kefas of Taraba State, Lucky Aiyedatiwa of Ondo State, and Ahmed Ododo of Kogi State, are advocating enhanced crop production through collaboration with the Federal Ministry of Agriculture to tackle food shortages.

Abdulrazaq, in the statement, explained that the Anchor Borrowers Programme that was previously implemented by the Central Bank of Nigeria did not achieve much.

He said, “We could not achieve much with the CBN Anchor Borrowers programme; it was very challenging. The issue of food security is a one-stop-shop and we need to concentrate on what we are doing. We need to concentrate on what we are doing for the dry season farming.

It stated “The minister has come up with a programme on cassava, rice, and maize and we want to engage in that programme and urgently make sure we improve on our yield and deliver to the Nigerian population.

“We want to get to a stage where we export our food. What we have now is that, because of the devaluation of our naira, Nigeria’s food is being exported to West Africa and is the cheapest in the region today.

“The governors have realised that we have a new Ministry of Agriculture, because over the last four years, before this administration, the engagement was not too productive.”

According to the statement, there are plans in Akwa Ibom for a state agency to procure and sell food items at lower prices.

Similarly, in Kano and Yobe authorities cracked down on food hoarding, banning bulk purchases and exports.

According to the report, Governors Mohammed Umar Bago of Niger State and Peter Mbah of Enugu State are working to eliminate hunger and poverty by investing in agriculture and rural economic development.

“In the same vein, in  Kano State, authorities raided warehouses where traders are suspected of hoarding food supplies.

 “In Yobe State government banned bulk purchases of grain from local markets to stop hoarding and exports across Nigeria’s borders, saying it was to stem the tide of food scarcity and high cost of grains.

“In Niger State, Governor Mohammed Umar Bago announced a ban on the mass purchase of foodstuffs from local markets. He ordered security forces to confiscate trucks carrying products in bulk and share the food with the people.

“In Enugu State, Governor Peter Mbah said his administration would eradicate hunger and poverty in the state and unlock the rural economy through investment in agriculture and agro-industrialisation.

“In Zamfara State, last week, Governor Dauda Lawal hosted the Sweden Ambassador, Annika Hahn-Englund, in partnership on how to grow the state economy and address the current hardships.”

OPS, others react

Meanwhile, members of the Organised Private Sector and some economists have reacted to the development, saying Nigerian foods will become cheaper in West African nations following the crash in the value of the naira.

According to the National President of the National President Nigerian Association of Chambers of Commerce Industry Mines and Agriculture, Mr Dele Oye, the observations made by the NGF highlight a nuanced aspect of currency devaluation especially its effect on trade competitiveness.

In a statement, Oye was quoted as saying, “The devaluation of the naira, while presenting broad economic challenges, does appear to have inadvertently enhanced the competitiveness of Nigerian food and grain exports within the West African region.

“This phenomenon is rooted in the economics of exchange rates. A weaker naira means that Nigerian goods become less expensive for buyers using stronger currencies. Consequently, Nigerian food and grains are now more competitively priced when compared to similar products from countries with stronger currencies. This price advantage can lead to an increase in demand for Nigerian exports within the region.”

However, while the immediate effect on exports may be positive, the NACCIMA boss said the broader implications of a persistent devaluation were multifaceted.

The statement explained, “On inflationary pressure, the cost of imported goods, including agricultural inputs such as machinery, fertilizers, and pesticides, will increase, potentially driving up domestic production costs over time. On consumer impact, the increased export of food and grains could lead to a reduction in domestic supply, thereby escalating food prices locally and aggravating food insecurity in Nigeria.”

Analysing the short-term gains versus long-term health, the NACCIMA said that while devaluation might boost exports in the short term, there were concerns about the long-term health of the economy if the underlying causes of the devaluation, such as macroeconomic instability or policy uncertainty, were not addressed.

It added, ‘Sustainable export growth: For export growth to be sustainable, it must be supported by productivity gains and not merely currency devaluation. Investments in agricultural technology, infrastructure, and human capital are crucial for maintaining a competitive edge.

In conclusion, while the devaluation of the naira has made Nigerian food exports more attractive in the short term, it is essential to approach this development holistically. It is crucial to balance the immediate benefits of increased export revenues with the need for a stable macroeconomic environment and the well-being of the Nigerian population. Long-term stability and growth of the agricultural sector will require structural reforms that address the root causes of currency weakness, improve productivity, and ensure food security for the Nigerian people.”

Also speaking, an economist at the Nigerian Economic Summit Group, Ikenna Nwosu, however disagreed with the notion that the naira depreciation was fuelling food exports abroad.

According to him, Nigeria’s food crisis has been a running theme in the Nigerian economy long before the exchange rate situation became worse in recent months.

He said, “The cost of food has been rising even before Buhari left office, and the cause of it is terrorism because farmers cannot go to their farms. So, food became scarce.

“The removal of subsidy became the second problem. When they removed subsidy, the cost of transporting the food now added to the cost of food.

“The issue of the exchange rate is not more than three months ago. It started around December. The scarcity and rising food prices have been on before that time.”

Speaking further, Nwosu advised the government to address the security crisis in the country, a development he said would allow farmers to produce optimally.

“The government needs to find a solution to the terrorism. They should also get the refineries to work. This will impact positively on food prices. The third thing they should do is to manage the exchange rate properly because the CBN can do better.”

The Director- General of the Nigeria Employers’ Consultative Association, Mr Adewale-Smatt Oyerinde, said, “One of the critical issues affecting food production is the bitting insecurity. Farmers have been dislodged by bandits in many areas and this remains a clog in the wheel of food production and food security.

“The government should step up efforts to address the insecurity challenge, provide necessary inputs to farmers and relaunch the back-to-the farm initiatives of past administrations.”

Also reacting, the President All Farmers Association of Nigeria, Kabir Ibrahim, said the government should address the biting food shortage by declaring a state of emergency on insecurity.

The AFAN president stated that achieving food security is impossible in the presence of insecurity, adding that the government must escalate efforts in combating insecurity as neglecting this issue may perpetuate ongoing challenges.

Kabir, who absolved its members of engaging in such activity of exporting food items to other West African countries, said, “More food should be produced to stop the shortage and increase our food supply. If the president is declaring a state of emergency on food security, it also means it should be extended to insecurity because there is a nexus. You can’t have food security if you have insecurity. It must be stemmed for farmers to go to their farms, so the government has to intensify the fight against insecurity. If you don’t do about it, we may keep having these issues.”

The spokesperson for the Central Bank of Nigeria, Sidi Ali, could not be reached for the bank’s reaction, as of press time.

Also, an economist and manager at Sankore Investment Limited, Thomas Jonathan, advised the government to focus on addressing issues of insecurity and poor economic policies .

“It is highly doubtful to say that, Nigerians are buying food in bulk because they want to export them out of the country. Because what we think is happening to food security is not that food items are scarce, what we are facing now is economic crisis due to high rate of inflation which makes purchasing power of citizens poor. Inflation reduces the purchasing power of currency.”

Check Also

Naira weakens at parallel market, gains at investors’ window

Steady Dollar Supply Pushes Naira To 1,262/$

The naira, on Wednesday continued its gain against the United States dollars, appreciating both at …

Leave a Reply

Your email address will not be published. Required fields are marked *

× Get News Alert