With the series of plans in place to completely remove fuel subsidy, demand for reflective tariff by electricity companies, these couple with Central Bank of Nigeria (CBN) new move to put importation of Sugar and wheat under foreign exchange restriction list, it means the prices of fuel, electricity and bread will soon go beyond the reach of common man.
Sugar and wheat are essential ingredients for making bread, and it is feared in some quarters that putting these items under a restricted list would have negative impact on the price of bread.
This is because, sourcing foreign exchange to bring in these commodities into the country might cost those in the business of sugar and wheat extra money to get it. Consequently, they would pass the cost to consumers of bread.
The Central Bank of Nigeria last week announced via its Twitter handle, that it would no longer provide foreign currency for importers of sugar and wheat, as the country tries to conserve national dollar reserves and promote local production.
Godwin Emefiele, CBN Governor, while justifying this action, said, the country spends $600m to $1bn importing sugar annually.
A similar action was taking against the importation of milk about three years ago, as the apex bank asked
money lenders to stop offering credit to importers of milk after saying it would ban access to foreign exchange for dairy purchases to support local production, However, in February 2020, CBN granted import waivers to six companies who had keyed into the Bank’s backward integration program (BIP) to enhance their capacity and improve local milk production.
According to National Bureau of Statistic (NBS) Nigeria’s food inflation increased sharply to 22.95% in March. Food inflation remains the major culprit of rising inflation, as the rise in the food index was caused by increases in prices of bread and cereals amongst other commodities.
According to Proshare With annual imports of $337.3 million in 2018, Nigeria is one of sub-Saharan Africa’s largest importers of sugar, second only to South Africa. A closer look at consumption, however, shows that of the three largest importers, Nigeria’s sugar consumption per capita ranks lowest at 7 kg a year. Raw sugar is provided by imports from countries such as Brazil and India. According to the Nigerian Sugar Development Council(NSDC), Nigeria’s total annual production from domestically grown raw sugar stood at 14,918 metric tonnes in 2017. This accounts for just 1% of total production. Sugar is primarily grown in Northern Nigeria where the weather and soil condition is most conducive.
For Wheat, Nigeria’s trade report shows that wheat was the country’s second most imported item in the second and third quarters of 2020.
Data from the United States Department of Agriculture shows that while Nigeria produced 60 tonnes of wheat in each of 2018, 2019, 2020, the domestic consumption of the commodity in those years stood at 4,760 tonnes, 4,900 tonnes, and 4,319 tonnes respectively.