Nigeria Spends $2bn on Wheat Importation Annually, Central Bank Says

The Central Bank of Nigeria (CBN) on Sunday revealed that the importation of wheat costs the country about $2 billion annually, thereby exerting pressure on the country’s food import bill.

This is just as the CBN has stated that the much-awaited Central Bank Digital Currency (CBDC), known as the eNaira would improve monetary policy effectiveness and enhance government’s capacity to deploy targeted social interventions and boost remittances through formal channels.

Also, in what appears to be a setback for the country’s cashless policy, a Federal High Court in Awka, has said it was not proper for the CBN as a federal institution to adopt discriminatory policies in its operations.

Commenting on the country’s food import bill, the central bank stated that wheat was its second highest contributor with over five million Metric Tons (MT) imported yearly.

The apex bank however, restated its commitment to addressing the existing challenges in the wheat value chain as part of efforts to shore up the country’s foreign reserves.

This was made known by the CBN Director, Development Finance Department, Mr. Philip Yila Yusuf, at the Wheat Conference and Stakeholder Engagement, with the theme: “Improving and Sustaining the Wheat Value Chain Development in Nigeria,” in Abuja.

He noted that the wheat value chain had enormous potential for ground-breaking impact in the agricultural sector, adding that the central bank would focus attention on the commodity value chain for 2021/2022 dry season planting following the sustainable progress made across the rice and maize value chain.

The CBN director, further estimated that only one per cent or 63,000MT of wheat, out of the 5-6 MT consumed annually, was produced locally.

He said the CBN intervention had become critical due to the high demand for wheat in the country as well as the inability to meet that demand.

He said, “The CBN plans to address key problems in the value chain through financing massive production of wheat in Nigeria and seeks to facilitate sustained availability of high yield seed variety in country and improve general productivity.”

While admitting the enormous challenge before the bank, which would require concerted efforts to address, he assured stakeholders of the CBN’s readiness in changing the narrative in the sector by working with relevant industry players.

However, the Minister of Agriculture and Rural Development, Mohammed Abubakar, expressed dismay that the country’s wheat importation had continued to increase in recent years, urging stakeholders to collaborate to reverse by investing more in the value chain.

Also speaking at the occasion, Kano State Governor, Dr. Abdullahi Umar Ganduje, charged stakeholders in the wheat value chain to be transparent in their dealings and to commence preparation for both farming and production of wheat.

The governor commended the CBN for its efforts in boosting the commodity value chain and encouraged the bank to expedite action in releasing funds.

Represented by the Kano State Deputy Governor, Dr. Nasiru Yusuf Gawuna, Ganduje emphasised that partnership among stakeholders in wheat production value chains remained critical in boosting the country’s quest to be self-sufficient in the production of wheat.

Earlier in March, CBN Governor, Mr. Godwin Emefiele, had indicated that the bank remained committed to improving local production of wheat and reducing importation by 60 per cent over the next two years.

On the eNaira, in its Regulatory Guidelines obtained by THISDAY, the apex bank said the initiative would improve monetary policy effectiveness and enhance government’s capacity to deploy targeted social interventions and boost remittances through formal channels.

The bank explained that that eNaira wallet was required to access, use and hold the digital currency.

The CBN also tasked the deposit money banks (DMBs) to facilitate prompt placement of restriction on eNaira wallets in the event of valid report of loss, theft of device or compromise, hack of a user eNaira wallet.

According to the Regulatory Guidelines on the eNaira, the apex bank further directed banks to ensure that customers are able to report via USSD channels, internet banking platforms, customer care phone lines, and in-branch customer care where there is any compromise in the eNaira transactions.

The CBN Governor, Mr. Godwin Emefiele, had said in unveiling the digital money, the bank does not downplay potential risks, adding however that the apex financial regulatory body had put in place appropriate mitigation mechanisms for safer operation.

He said, “We are not going to pretend that there are no risks in opening your system up. We will look at the various products, determine the risks, determine the best way to mitigate the risks before opening it up.

“But it is a journey that we are determined and decided that we will start on October 2021.”

The planned unveiling of the CBDC originally slated for October 1, 2021, was put on hold due to other key activities lined up to commemorate the country’s 61st independence anniversary.

However, the CBN, in the framework for the operation of the eNaira further set the transaction and balance limits for individual and merchant eNaira wallets.

In the Tier 0 category or phone number without verified National Identity Number (NIN), daily transaction is limited to N20,000 with balance or eWallet limit set at N120,000.

For the Tier 1 category with verified National Identity Number (NIN), daily transaction limit is set at N50,000 with N300,000 balance.

However, those in the Tier 2 category would be able to transaction up to N200,000 on a daily basis with eWallet balance of N500,000 while Tier 3 would have daily transactions of N1 million with balances of N5 million.

However, merchants, or duly accredited individuals and non-individual (corporates) authorised to conduct business in Nigeria will have no limits on eNaira transactions.

The CBN also stated that under the digital currency framework, Financial Institutions (FIs) shall render returns to the bank in line with the provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 and as may be specified from time to time.

The guidelines, among other things, said FIs shall put in place appropriate measures to ensure sound risk management practices to address potential threats to their operations.

These include an enterprise risk management framework; Appropriate governance structures,; Documented and approved policies; and Secured information technology infrastructure.

It said, “Financial Institutions shall be required to implement additional risk management measures as may be prescribed by CBN guidelines from time to time.”

The guidelines stipulated role and responsibilities of the different stakeholders particularly with respect to ensuring the prevention or minimisation of loss following loss, theft of a user’s device or compromise, hack of user eNaira wallet.

Meanwhile, on the cashless matter, the court presided over by Justice Nnamdi Dimgba made the pronouncement in a judgment delivered in a suit filed against the CBN over alleged imposition of discriminatory bank charges on some categories of cash depositors.

Depositors affected by the said discriminatory policy were those lodging N500,000 above in bank accounts domiciled in selected six states and the FCT.

A legal practitioner, Chijioke Ifediora, who was a victim of the CBN discriminatory policy decided to challenge its legality and filed Suit FHC/AWK/CS/91/2020, arguing that the discriminatory bank charges was ultra vires, illegal and unconstitutional.

The CBN had in line with its cashless policy initiatives, imposed the contentious charges via two separate Circulars, BPS/DIR/GEN/CIR/04/004 and PSM/DIR/CON/CWO/02/014 dated 20th April 2017 and 17th September 2019 respectively.

But the plaintiff had urged the court to consider the provisions of Sections 1 (3 ) , 2 ( 1) and Section 42 of the constitution of Nigeria, 1999 ( as amended), in order to determine whether the said two CBN circulars were not discriminatory, ultra vires, unconstitutional and illegal.

He had stated that he took the decision to drag the CBN to court when on January 7th, 2020, he went to a bank at Amawbia Awka, Anambra State, to make cash lodgment of N600,000 into his account. According to him, a bank official told him that he would not be allowed to effect the deposit without paying the charge in accordance with the CBN circular PSM/DIR/CON/CWO/02/014.

He, therefore, asked the court to grant him three reliefs, namely, that the said two CBN circulars were ultra vires, unconstitutional and illegal and were in conflict with Section 1(3), Section 2(1) and Section 42 of the 1999 Constitution of Nigeria.

The third relief sought by the plaintiff is that the charges emanating from the implementation of the two CBN Circulars are illegal and unlawful.

Consequently, the plaintiff urged the court to make five Declaratory Orders compelling the CBN to refund illegal or unlawful charges imposed on all citizens and corporate bodies operating in Anambra, who were victims of the implementation of the said circulars. Others included the refund of all citizens and corporate bodies operating in Anambra, Abia, Lagos, Ogun, Kano, Rivers and FCT who were also allegedly made to pay the illegal or unlawful charges by the implementation of the CBN circulars; order a perpetual injunction restraining the Defendant (CBN) from publishing or issuing circulars or implementing similar policies that are discriminatory or in conflict with Section 42 of the constitution, restraining all financial institutions and deposit money banks from implementing similar discriminatory policies and lastly, direct the CBN to make a reversal publication of the implementation of the said circulars in five national newspapers indicating compliance with the Decision of Court and refund of the unlawful charges.

In his submission, counsel for the CBN, Chief Musa M. Tolani, an Aba-based legal practitioner, argued that the plaintiff lacked the locus standi to file the Suit, describing him as a meddlesome interloper, since he did not have the authority of all the citizens and corporate institutions residing in the affected states.

He also stated that the plaintiff failed to show how the policy affected him injuriously more than the rest of the residents of the states being sought to be protected.

Tolani added that the policy was introduced to facilitate the implementation of the CBN well intentioned and worthy cashless policy for the overall well-being of the federation economy.

However, delivering his judgment, Justice Dimgba was inclined to agree with the plaintiff that the CBN policy was discriminatory ab initio before its eventual general application across the federation, hence the suit was challenging the lawfulness of the action of the CBN, which is a federal government agency

Though he agreed with the plaintiff on the first three reliefs sought and affirmed that the CBN policy was discriminatory and offended section 42 of the 1999 constitution (as amended) the judge declined to grant the five consequential Orders.

Justice Nnamdi explained that the refusal to grant the five consequential orders were no longer necessary since it was admitted during oral evidence that the CBN policy is now implemented nationwide.

Alex Enumah and Emmanuel Addeh in Abuja

Follow us on: