In the past week, two critical economic issues have dominated headlines with several technocrats giving their expert opinion on likely consequences on the Nigerian economy.
One is the directive by President Muhammadu Buhari last Tuesday restricting the Central Bank of Nigeria (CBN) from providing foreign exchange (forex) for the importation of ‘food’ into the country. Then there is the recent London court ruling that grants a foreign firm permission to seize Nigerian assets of up to $9 billion over a gas project deal that went south in 2010.
As concerns continue to grow among citizens, experts, and even foreign investors over the direction of the Nigerian economy following recent developments, the CBN Governor Godwin Emefiele addressed these issues while speaking with State House correspondents at the retreat organized for ministers-designates in the Presidential Villa in Abuja yesterday.
Food import ban and AfCFTA
Having said nothing for almost a week, Governor Emefiele affirmed the president’s announcement at the event and clarified the directive. “Let me say this, Mr President’s comment on the issuing of forex to people who import food items into the country is in the logic of CBN’s management foreign exchange policies that we started since 2016. If you recall, we started with about 41 items (food and non-food items), because we believe that those items can be produced in the country,” Emefiele explained.
He said that presently, there are about 43 items on that list and most of them are food items. While giving justification to the president’s comments, Emefiele said the rationale is that if a food item can be produced in the country, there is no point ‘wasting’ scarce foreign exchange importing those items into the country.
“It is important for me to say that the attempt to misrepresent the comments of Mr President is very unfair and unfortunate. But, what we will say from the CBN is that Mr President has made this comment purely to strengthen the position of the CBN, to say that he believes in what the CBN has been doing since 2016 and there is (a) need for us to reinforce that going forward,” the CBN Governor said.
Quizzed on how the restriction on food importation may affect Nigeria’s potential benefit from the recently signed African Continental Free Trade Agreement (AfCFTA), Emefiele dismissed reports that the planned forex restrictions on food import will dampen the country’s chances of benefitting from the African trade deal.
He further explained that it would not affect the content of the agreement as it was still ongoing and the terms of engagement were still being discussed and negotiated. “The important thing is that Nigeria needs to stand as the largest economy in Africa and the largest populated country in Africa, we need to stand and dictate the terms under which we want to be in it and this is what we are saying,” The CBN chief asserted. “But what I am saying is that it is wrong, it is inappropriate that an item that can be produced in Nigeria should be imported into Nigeria.”
Furthermore, restricting forex on importing certain items that can be produced in Nigeria is also fundamental to Nigeria’s chances, Emefiele revealed. Although he admitted that there are challenges ahead, he albeit stated that job creation is paramount to the bank at the moment.
“When we get into the AfCFTA issues, we will also look at the details of it, but at this time, we are saying we need to create jobs for our country, for the youths and we need to create jobs. We yearn for growth and the only way we can really accelerate growth in a Nigeria between now and next four years is to see to it that items that can be produced in Nigeria are indeed produced in Nigeria rather than being imported into the country.”
The $9 billion ruling and foreign reserves
Meanwhile, Emefiele disclosed that Nigeria will move to get a stay of action against the $9 billion judgment. There are on-going discussions with the CBN counsels, and the bank has been advised that there are sufficient and strong grounds for Nigeria to file a stay of execution and also make an appeal.
“I am not scared at all and I think it is also important that this question has come up. Since the news about the judgment broke out late on Friday, we have been discussing with our counsels, and they have advised that there are sufficient and strong grounds on the basis of which we could file a stay of execution and also an appeal against that judgment,” Emefiele said.
He added that “There are certain anomalies in the process leading to the award of that contract which is currently being looked into by the EFCC and I believe that the EFCC themselves have their own investigation reports about that. So, we will follow through and aggressively too on ensuring that the execution of that judgment stays and that the appeal succeeds at every level both within Nigeria and abroad.”
While admitting that there are tough times ahead as the ruling could affect monetary policy, Emefiele allayed the fears of the investors over the issue. The CBN Chief claimed to be making vigorous efforts to defend the bank’s interest while he promised not to relent in exploring every viable option available as well as defend the country’s foreign reserves.
“It is important for me to use this opportunity to assure our friends, local and foreign investors who called to express solidarity with us, not to express concern but to say that there is no need for anybody to worry. We know that the implication of that judgment has some impact on monetary policy and that is why the CBN is going to step forward and very strongly too to ensure that we defend the country and defend the reserves of the Federal Republic of Nigeria,” Emefiele concluded.