Two ministers on Friday blamed the current food crisis in the country on the unintended consequences of the two reforms introduced by the federal government on petrol subsidy and forex....For More CONTINUE THE FULL READING▶▶
Minister of Agriculture, Abubakar Kyari, attributed the food shortage in the country to the devaluation of the naira which has made the nation’s currency very weak, compared to the CFA franc, the currency used by eight other states in the West Africa sub-region.
Kyari made the disclosure on Friday at the National Assembly in his presentation before the Senate committees on Finance, Appropriation, Banking, Insurance and Other Financial Institutions.
The former acting national chairman of the All Progressives Congress (APC) lamented that the devaluation of the naira had put neighbouring countries at an advantage to buy cheaper farm products from Nigeria which are now consequently smuggled across the border by peasants.
He said: “What we are faced with today is the undocumented export of food to our neighbouring countries. Today, one CFA is N2.50, that is to say, 100 CFA is N2,200. That used to be N400 a few years ago. When you look at our neighbouring countries, all four neighbouring countries around us, the CFA is their currency and because of the devaluation of the naira, our food is the cheapest around the neighbourhood. So, you find a lot of undocumented exports, smuggling across our porous borders to these neighboring countries.”
The minister, who said the Federal Government might be compelled to again seal up the borders against the country’s neighbours, expressed concern over unrestrained exportation of certain farm produce by nationals of China, India and Turkey who earned foreign exchange from it while the country earns nothing in return.
He said: “The other angle that we have over the period is the unavailability of foreign exchange. A lot of investors, Indians, Chinese, Turkish, that are operating in this country buy our crops that are sought after outside, like soya beans and buy them at exorbitant prices just to earn foreign exchange. When they go outside there to earn foreign exchange, the worst part is that most of these monies are not repatriated back to us.
“Export is a good thing for us but when you don’t earn the foreign exchange and it is not repatriated back to us, and government doesn’t have any income from it, I am sorry, that is not a good sign.
“So, what we are trying to do here is to ramp up production. I think it is an issue of economics, between supply and demand, but unfortunately we have to see how we can secure food for our 230 million citizens and at the same time if this economic situation continues, then you have to seal up the borders which is against the ECOWAS issue.”
Kyari’s counterpart in the Ministry of Budget and Planning, Atiku Abubakar Bagudu, noted that the removal of fuel subsidy is also affecting planting by farmers.
Bagudu said: “The benefits of fuel subsidy reforms have to be supported by measures that will guarantee food production and stability.
“From our perspectives, particularly from budget and planning, there are places today in about 18 states in the country where you can still plant rice for the dry season farming, including the constituency of the chairman of the national planning in five local governments where, if care is not taken, not for reasons of insecurity, 70 percent of the planting areas might not be cultivated because of fuel cost.
“It is the same thing in a number of places in the constituency of my brother, Senator Adamu Aliero. The balancing of the reforms and ensuring the necessary measures are implemented urgently in order to ensure that we support the reforms is the point made by Senator Aliero. And the commendable act of removing fuel subsidy needs to be supported by measures that support domestic production in order to achieve the full impact.”
As the senators grilled members of the Economic Management Team, they asked the Federal Government to end the pain of Nigerians by applying urgent, workable solutions in its economic recovery policies.
With the inflation rate at 28.92 percent, increased hunger, an exchange rate of about N1,500 to the United States dollar, insecurity and scarcity of food, the lawmakers said President Bola Tinubu and his economic team must respond with measures that would yield faster results.
The team, which was led by the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, appeared before the joint Senate committee co-chaired by senators Sani Musa and Adetokumbo Ashiru.
The governor of the Central Bank of Nigeria (CBN), Mr Yemi Cadoso, was also in attendance.
The senators grilled the ministers for over three hours, seeking explanations for the current economic hardship, particularly inflation, exchange rate crisis, insecurity and food scarcity that have forced Nigerians to start protesting publicly in some states of the federation.
They noted that the sufferings faced by Nigerians have continued to worsen in spite of constant assurances by government that its interventions were yielding fruits.
For instance, Senator Orji Kalu told the team that the manufacturing and agricultural sectors “are practically dead.”
Kalu said the “rush for dollar” in Nigeria had reached an embarrassing level where some goods and services were now priced in the United States’ currency in Nigeria.
“The use of dollar in Nigeria should be an abomination. I can see even shops in Abuja advertising their goods in dollars. Are we going to dollarise our economy?
“What are your plans to stop the threat by Nigeria Labour Congress (NLC) to embark on a protest?” he said.
Senator Abdul Ningi observed that Nigerians had heard more speeches and promises from government officials than solutions to their sufferings.
He said: “The rhetoric continues. This is typical of us. The dollar has been criminalised. Most of us in government are involved. And it even starts from the CBN.
“People are stealing this dollar and know nothing will happen to them. This issue of dollar bribe is from top to bottom.”
But the finance minister, Edun, while reassuring the senators that the government’s interventions were yielding results, expressed the sympathy of Tinubu with Nigerians and called for more patience to allow his administration’s measures to mature.
The governor of the CBN, Yemi Cardoso, in his submission, said the apex bank had no magic wand to address the free-fall of the naira, just as he admonished Nigerians to reduce consumption of foreign goods.
He also attributed the high demand for the greenback to medical tourism and high demand for education in foreign lands.
Cardoso reiterated the government’s belief that the inflation rate would drop to around 21.4 percent later in the year.
For the exchange rate crisis, Cardoso said one way the elite could help the government in resolving it was to reduce their appetite for using foreign currencies, especially the dollar.
He disclosed that foreign investors had begun to restore confidence in the economy as a result of the measures introduced, which had seen an inflow of over $1 billion lately.
Cardoso said: “The Nigerian foreign exchange market is currently facing increased demand pressures, causing a continuous decline in the value of the naira. Factors contributing to this situation include speculative forex demand, inadequate forex supply, increased capital outflows and excess liquidity.
“To address exchange rate volatility, a comprehensive strategy has been initiated to enhance liquidity in the FX markets. This includes unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for BDCs and IMTOs, enforcing the Net Open Position limit, Open Market Operations, adjusting the remunerable Standing Deposit Facility cap, among others.
“Distinguished senators, these measures, aimed at ensuring a more market-oriented mechanism for exchange rate determination, will boost foreign exchange inflows, stabilise the exchange rate, and minimise its pass-through to domestic inflation.
“Indeed, they have already started yielding early results with significant interest from Foreign Portfolio Investors (FPIs) that have already begun to supply the much-needed foreign exchange to the economy.
“For example, upwards of $1 billion in the last few days came in to subscribe to the Nigeria Treasury Bill auction of one trillion naira which saw an over-subscription earlier this week.
“Our measures aimed at improving USD supply into the Nigerian economy have significant potential in taming the volatility of the exchange rates. However, for these measures to be sustainable, we must, as a country, moderate our demand for FX.
“It is also clear that the task of stabilising the exchange rate, while an official mandate of the CBN, would necessitate efforts beyond the bank itself. It will also include actions by corporates and individuals to reduce our frequent demand for the dollar for business and personal needs.”
When asked to tell Nigerians when the exchange rate would stabilise or drop significantly, the governor replied that he did not know.
“Our measures on exchange rate, well, we don’t know when it will go down, but can I assure you that as the measures kick in, rates will go down ultimately?
“We have to moderate our demand for FX as well,” Cardoso added..…CONTINUE. FULL. READING>>>
