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CBN’s Import Ban and Nigeria’s Looming Maize Crisis

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Ikechukwu Kelikume maize imports

By Ikechukwu Kelikume

Nigeria, like many other African countries that rely on the agricultural sector for their food sustenance and employment generation, is experiencing unfolding events in the country since the World Health Organization (WHO) declared the COVID-19 outbreak a global pandemic on February 28, 2020.

Following the shutdown directive by the federal government and the restriction of movement across the states in the country, agricultural production, processing and distribution have been severely affected. One such area which has been adversely affected is the production and processing of maize.

Farmers across the maize value chain, especially those operating in the poultry segment, are experiencing a tough time in finding maize to buy.

Maize, which constitutes over 50 per cent of poultry feed, is currently very scarce and prices are rising every day. The scarcity of maize and the continuous rise in its cost has dire consequences, on not only the poultry farmers but on all associated sectors that are linked directly or indirectly to the poultry value chain.

An earlier report published on June 29, 2020, in Agribusiness Newsletter, narrated the plight of poultry farmers in Nigeria.

According to the report, Chief Alfred Mrakpor, the Delta State Chairman of Poultry Association of Nigeria, summed up the plight of poultry farmers, stating emphatically that, “the rising cost of maize is threatening the livelihood of small businesses in Nigeria.

“It is not only poultry farmers’ investment that is threatened but also other players in the value chain, such as feed producers, chicken and egg vendors, processors, grain traders’, veterinary doctors and other related sectors.”

The Central Bank of Nigeria (CBN) on July 13, 2020, directed all authorized dealers to discontinue the processing of Form M for the importation of maize/corn with immediate effect.

This directive, according to the apex bank, is done in continuation with its effort to increase local production in the country, stimulate rapid recovery, safeguard rural livelihood and grow jobs.

The implementation of the CBN directives of withdrawal of Form M for maize importation puts immediate and significant pressure on the sector already burdened with the scarcity of maize-a fall out of the adverse effects of the COVID-19 pandemic.

Maize is considered the second most consumed cereal in the country next only to cassava. The importance of maize can be seen directly in the total area currently under cultivation in Nigeria.

According to FAOSTAT, 2018 report, maize is the second most cultivated crop in Nigeria with an estimated harvested area of 4.8 million hectares next only to cassava that has a total area cultivated of 6.7 million hectares.

Current Concern for Maize farmers, Poultry Operators and Feed Millers in Nigeria

At the beginning of the farming season, maize sold for between N70,000 and N80,000 per ton. Its current selling price is between N165,000 per ton and N175,000 per ton, which is now considered very high. The projection is that the price will rise further to about N200,000 per ton in the coming months.

The current hike in the amount of maize is the result of its scarcity, due, on the one hand, to the border closure across the country and on the other hand to low maize/corn productivity in the country. Added to the unknown factors that have created a shortfall in maize production are the unpredictable weather conditions and the adverse effect of the COVID-19 pandemic.

The disruption in production, distribution, transportation, marketing and free movement of farmers and labour coincided with the maize planting season in both the northern and southern part of Nigeria.

These notable changes imply that Nigeria cannot meet over 12 million metric tons of maize needed to supply the feed millers, the poultry farmers and to meet the household demand.

Figures from FAOStat (2018) put Nigeria’s maize yearly production in 2019 at 11 million metric tons while the annual maize consumption estimate is 11.4 million metric tons, creating a gap of over 400,000 metric tons of maize which is made up for by importation.

The projected demand for 2020 is that the country will need an additional 100,000 metric tons of imported maize to augment local production.

With the disruption of business activities and the restriction of movement across the country in the first quarter of 2020, maize cultivation, processing and distribution were adversely affected.

Short-term Measure to Curb Maize Shortages

There is no doubt that the CBN policy of Agric, Small and Medium enterprise scheme and the Anchor Borrowers Programme (ABP) have been very successful in opening up the agricultural sector in the country. Both policies have worked effectively in closing the productivity gap in the farming sector.

But the current decision of the apex bank to discontinue the processing of Form M for the importation of maize/corn will roll back the gains of the intervention in the sector.

The current reality is that maize prices will continue to spike in the coming months, as evident in the data published by the National Bureau of Statistics (2020). The spike in the price of maize reflects its current scarcity, as corn grain reserves stored from last season has been fully depleted, leading to a shortage of the product.

The situation spells doom for poultry farmers across the country who are beginning to cut down on production because of the high cost of feed and imported medication for the birds.

A negative spillover effect of the high cost of feed is the scarcity of eggs and a consequent rise in the price of eggs across the country. The implications of the current challenges in the maize value chain are that the gains of employing more people in the agricultural sector will be rolled back in the coming months.

As it stands, there is no alternative for the poultry farmers as the poultry sector will face a catastrophic shortage of feeds, a critical input in their business. This situation will render tens of thousands of them unemployed and undo all the gains made by this sector in the past five years.

Thousands of poultry businesses will shut down in the face of high operating costs, leaving business owners and their employees without a means of livelihood.

As a matter of necessity, the CBN’s decision to discontinue the processing of Form M for the importation of maize/corn must be revisited. It is expedient at this time for the central bank to allow importers of maize to import it through the CBN foreign exchange window, to close the gap in maize shortage while preparing for phased discontinuation of maize importation in the country.

The total shortfall is just around 100,000 metric tons, which translates to an import bill of less than $20 million. This cost is a negligible import burden even in the current tight FX situation and a small price to pay to salvage the poultry sector.

The time to act is now. The government must put its mechanism in place to import maize into the country as a temporary measure to plug the pending scarcity that is imminent in the last quarter of the year 2020. Nigeria has a high production potential for maize. Notwithstanding, the current challenge is that the production and supply bottleneck in the sector have first to be checkmated for any meaningful import restriction measure to be effective.

Dr Ikechukwu Kelikume is the Head of Department of Finance, Accounting and Economics at the Lagos Business School. He also is the programme director of LBS agribusiness programme: [email protected]

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The Future of Payments: Key Trends to Watch in 2025

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Luke Kyohere

By Luke Kyohere

The global payments landscape is undergoing a rapid transformation. New technologies coupled with the rising demand for seamless, secure, and efficient transactions has spurred on an exciting new era of innovation and growth. With 2025 fast approaching, here are important trends that will shape the future of payments:

1. The rise of real-time payments

Until recently, real-time payments have been used in Africa for cross-border mobile money payments, but less so for traditional payments. We are seeing companies like Mastercard investing in this area, as well as central banks in Africa putting focus on this. 

2. Cashless payments will increase

In 2025, we will see the continued acceleration of cashless payments across Africa. B2B payments in particular will also increase. Digital payments began between individuals but are now becoming commonplace for larger corporate transactions. 

3. Digital currency will hit mainstream

In the cryptocurrency space, we will see an increase in the use of stablecoins like United States Digital Currency (USDC) and Tether (USDT) which are linked to US dollars. These will come to replace traditional cryptocurrencies as their price point is more stable. This year, many countries will begin preparing for Central Bank Digital Currencies (CBDCs), government-backed digital currencies which use blockchain. 

The increased uptake of digital currencies reflects the maturity of distributed ledger technology and improved API availability. 

4. Increased government oversight

As adoption of digital currencies will increase, governments will also put more focus into monitoring these flows. In particular, this will centre on companies and banks rather than individuals. The goal of this will be to control and occasionally curb runaway foreign exchange (FX) rates.

5. Business leaders buy into AI technology

In 2025, we will see many business leaders buying into AI through respected providers relying on well-researched platforms and huge data sets. Most companies don’t have the budget to invest in their own research and development in AI, so many are now opting to ‘buy’ into the technology rather than ‘build’ it themselves. Moreover, many businesses are concerned about the risks associated with data ownership and accuracy so buying software is another way to avoid this risk. 

6. Continued AI Adoption in Payments

In payments, the proliferation of AI will continue to improve user experience and increase security.  To detect fraud, AI is used to track patterns and payment flows in real-time. If unusual activity is detected, the technology can be used to flag or even block payments which may be fraudulent. 

When it comes to user experience, we will also see AI being used to improve the interface design of payment platforms. The technology will also increasingly be used for translation for international payment platforms.

7. Rise of Super Apps

To get more from their platforms, mobile network operators are building comprehensive service platforms, integrating multiple payment experiences into a single app. This reflects the shift of many users moving from text-based services to mobile apps. Rather than offering a single service, super apps are packing many other services into a single app. For example, apps which may have previously been used primarily for lending, now have options for saving and paying bills. 

8. Business strategy shift

Recent major technological changes will force business leaders to focus on much shorter prediction and reaction cycles. Because the rate of change has been unprecedented in the past year, this will force decision-makers to adapt quickly, be decisive and nimble. 

As the payments space evolves,  businesses, banks, and governments must continually embrace innovation, collaboration, and prioritise customer needs. These efforts build a more inclusive, secure, and efficient payment system that supports local to global economic growth – enabling true financial inclusion across borders.

Luke Kyohere is the Group Chief Product and Innovation Officer at Onafriq

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Ghana’s Democratic Triumph: A Call to Action for Nigeria’s 2027 Elections

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In a heartfelt statement released today, the Conference of Nigeria Political Parties (CNPP) has extended its warmest congratulations to Ghana’s President-Elect, emphasizing the importance of learning from Ghana’s recent electoral success as Nigeria gears up for its 2027 general elections.

In a statement signed by its Deputy National Publicity Secretary, Comrade James Ezema, the CNPP highlighted the need for Nigeria to reclaim its status as a leader in democratic governance in Africa.

“The recent victory of Ghana’s President-Elect is a testament to the maturity and resilience of Ghana’s democracy,” the CNPP stated. “As we celebrate this achievement, we must reflect on the lessons that Nigeria can learn from our West African neighbour.”

The CNPP’s message underscored the significance of free, fair, and credible elections, a standard that Ghana has set and one that Nigeria has previously achieved under former President Goodluck Jonathan in 2015. “It is high time for Nigeria to reclaim its position as a beacon of democracy in Africa,” the CNPP asserted, calling for a renewed commitment to the electoral process.

Central to CNPP’s message is the insistence that “the will of the people must be supreme in Nigeria’s electoral processes.” The umbrella body of all registered political parties and political associations in Nigeria CNPP emphasized the necessity of an electoral system that genuinely reflects the wishes of the Nigerian populace. “We must strive to create an environment where elections are free from manipulation, violence, and intimidation,” the CNPP urged, calling on the Independent National Electoral Commission (INEC) to take decisive action to ensure the integrity of the electoral process.

The CNPP also expressed concern over premature declarations regarding the 2027 elections, stating, “It is disheartening to note that some individuals are already announcing that there is no vacancy in Aso Rock in 2027. This kind of statement not only undermines the democratic principles that our nation holds dear but also distracts from the pressing need for the current administration to earn the trust of the electorate.”

The CNPP viewed the upcoming elections as a pivotal moment for Nigeria. “The 2027 general elections present a unique opportunity for Nigeria to reclaim its position as a leader in democratic governance in Africa,” it remarked. The body called on all stakeholders — including the executive, legislature, judiciary, the Independent National Electoral Commission (INEC), and civil society organisations — to collaborate in ensuring that elections are transparent, credible, and reflective of the will of the Nigerian people.

As the most populous African country prepares for the 2027 elections, the CNPP urged all Nigerians to remain vigilant and committed to democratic principles. “We must work together to ensure that our elections are free from violence, intimidation, and manipulation,” the statement stated, reaffirming the CNPP’s commitment to promoting a peaceful and credible electoral process.

In conclusion, the CNPP congratulated the President-Elect of Ghana and the Ghanaian people on their remarkable achievements.

“We look forward to learning from their experience and working together to strengthen democracy in our region,” the CNPP concluded.

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The Need to Promote Equality, Equity and Fairness in Nigeria’s Proposed Tax Reforms

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By Kenechukwu Aguolu

The proposed tax reform, involving four tax bills introduced by the Federal Government, has received significant criticism. Notably, it was rejected by the Governors’ Forum but was still forwarded to the National Assembly. Unlike the various bold economic decisions made by this government, concessions will likely need to be made on these tax reforms, which involve legislative amendments and therefore cannot be imposed by the executive. This article highlights the purposes of taxation, the qualities of a good tax system, and some of the implications of the proposed tax reforms.

One of the major purposes of taxation is to generate revenue for the government to finance its activities. A good tax system should raise sufficient revenue for the government to fund its operations, and support economic and infrastructural development. For any country to achieve meaningful progress, its tax-to-GDP ratio should be at least 15%. Currently, Nigeria’s tax-to-GDP ratio is less than 11%. The proposed tax reforms aim to increase this ratio to 18% within the next three years.

A good tax system should also promote income redistribution and equality by implementing progressive tax policies. In line with this, the proposed tax reforms favour low-income earners. For example, individuals earning less than one million naira annually are exempted from personal income tax. Additionally, essential goods and services such as food, accommodation, and transportation, which constitute a significant portion of household consumption for low- and middle-income groups, are to be exempted from VAT.

In addition to equality, a good tax system should ensure equity and fairness, a key area of contention surrounding the proposed reforms. If implemented, the amendments to the Value Added Tax could lead to a significant reduction in the federal allocation for some states; impairing their ability to finance government operations and development projects. The VAT amendments should be holistically revisited to promote fairness and national unity.

The establishment of a single agency to collect government taxes, the Nigeria Revenue Service, could reduce loopholes that have previously resulted in revenue losses, provided proper controls are put in place. It is logically easier to monitor revenue collection by one agency than by multiple agencies. However, this is not a magical solution. With automation, revenue collection can be seamless whether it is managed by one agency or several, as long as monitoring and accountability measures are implemented effectively.

The proposed tax reforms by the Federal Government are well-intentioned. However, all concerns raised by Nigerians should be looked into, and concessions should be made where necessary. Policies are more effective when they are adapted to suit the unique characteristics of a nation, rather than adopted wholesale. A good tax system should aim to raise sufficient revenue, ensure equitable income distribution, and promote equality, equity, and fairness.

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