The Central Bank of Nigeria has announced that Sugar and Wheat will soon be added to its Foreign Exchange restriction list.

In a tweet announcing the impending policy on Friday, April 16, 2021, the CBN said Nigerians need to work to ensure these food items are produced locally.

When implemented, wheat and sugar importers won’t be able to source for foreign exchange from the Nigerian foreign exchange market to import these items into the country anymore.

Wheat and sugar are used in the production of so many staple foods such as bread, pasta, flour, noodles, biscuits, cakes, pastries, seasoning and many more.

And when the CBN bans access to FX, Nigerians who are into the wheat and sugar importation business will have to get it in the black market for a higher price.

Instead of getting FX at the official rate of N380, they will have to buy it at whatever price black market operators place on it; currently, it is N500.

The implication of this is that when wheat and sugar importers spend more to get FX, the extra cost incurred will be transferred to the cost of production of fast-moving consumer goods and other food items automatically.

Bread price about to hit the roof

Again, Nigeria is currently not producing enough wheat for domestic consumption. As a matter of fact, Nigeria is not among the top five countries reputed for wheat production globally.

As it is, wheat production is abysmal in Nigeria as the country only manages to produce two per cent of all the wheat it consumes. This explains why wheat is the most second imported commodity in Nigeria.

So, if the CBN successfully adds wheat to its foreign exchange restriction list, it will directly affect the cost of production of bread, biscuits, and other staple foods and snacks. This will, in turn, contribute to the country’s exponential inflation and further cripple the economy.

Therefore, it means that the smallest loaf of bread will rise from N50 to N60 or N70.

The same applies to sugar as Nigeria still depends largely on importation of sugar for local consumption, even though the federal government’s policy on Backward Integration Policy in the sugar sector was introduced to end sugar importation.

However, the whole idea behind the CBN’s initiative is for the country to produce most of what it consumes. Still, economists have argued that Nigeria cannot produce some of the food items the CBN lists on the FX restriction list even if the country stops importing them for a year.

This also explains why the FG’s policy on the closure of borders against rice importation failed.

The country’s goal of attaining self-sufficiency in rice hasn’t been met, even after the nation’s land borders were shut for over a year to stimulate local rice production.