Perspectives on Nigeria's Zero-Duty Import Waiver

By Akinyinka Akintunde

In the past year. Nigeria has grappled with more chronic hunger and food insecurity than it has ever seen, with over 21% of the population facing acute hunger. There is no clearer picture of the hunger situation in Nigeria than what we see around us today; families forced to survive on one meal a day, food costs rising at an alarming rate and the urgency in both calls and actions on food system policies.

On one end of Nigeria's problem, we see the persistent problem of low productivity, where farmers are unable to harvest the right volumes to support food demand, and on another end of this challenge, and perhaps the most exigent, lies faulty post-harvest infrastructure and methods. Truly the issues are multifaceted, but data does excavate how huge of a problem post harvest losses are.

Today, Nigeria's post-harvest losses sits at N3.5 trillion annually. By comparison, the value of Nigeria's entire food import as of 2022 was N1.9 trillion.

This paints a picture of the need for an overhaul of our food system, but solving infrastructure gaps is not a short term thing and right now, we need to prioritize constant and consistent food supply for consumption. It is against this backdrop that the Federal Government has been working to address food concerns, leveraging integrated approaches that start at producer level, up to supply. The recent waiver on food imports is an exemplification of one of such initiatives, primarily created to bridge the processing supply gap.?

While general response to the policy is skewed between the skeptics and the optimists, certain conditionalities must exist to classify this policy as a success. For one, agriculture is a very time-driven activity because the rain starts at a certain time of the year; farmers plant and harvest at a certain time of the year and whatever is done at a certain month of the year has huge implications on harvest.

Speaking to this policy, it is important for the imported commodities to come in on time, specifically before harvest season, or we risk a situation where farmers harvest and we have a glut, crashing prices and reducing income for refinancing the next harvest season, resulting in a cycle of low financing and low productivity.

Alternatively, a win-win situation emerges where stakeholders take advantage of the window and begin importation of food items through commodity exchanges, as stipulated by the Nigerian Customs Service, and are able to immediately process and distribute. Already, the late rains have pushed back harvest by about 2 months, partly caused by changing rainfall patterns, and this presents an opportunity for the value chain to run smoothly and further close the large supply gар.

In our place as a facilitator, with operations at the intersection of aggregation, supply chain and processing, we see a lot of data on both sides of the market. Towards the end of last year, our crop production report highlighted that price parity for global rice, compared to local prices, would create a suitable environment for the importation of rice and we have seen this play out.

In the long run, solving our food supply problem requires us to focus on establishing strategically located storage hubs with processing facilities, market linkages, and supporting infrastructure; promoting cluster based development of storage facilities to achieve economies of scale and efficiency, while leveraging public and private collaboration to pool resources and expertise in addressing food security challenges.

As we face the immediate food security crisis, AFEX as a commodities exchange is actively involved, with our Exchange platform, Africa Exchange, providing the supporting infrastructure to support stakeholders on this and other initiatives that require efficiency and transparency in commodity trade and investment. By connecting players and providing the required infrastructure for trade, we are actively joining other amazing companies across the food and commodity value chain to create a response that can actually move the needle on our current food security status.

Our Exchange platform – Africa Exchange – which has served as a vital technological infrastructure for commodities trade and investment over the past five years is a seamless and efficient way to manage trading activities in light of the recent policy direction on the zero-percent duty rate on basic food items .

Read our market notice on Onboarding on the Exchange, and click here to get onboarded.