Recently, the Central Bank of Nigeria, released its policy on the “inclusion of some imported goods and services on the list of items not valid for foreign exchange in the Nigeria Foreign exchange markets”
The items listed under this policy include: rice, palm oil products, vegetables, processed vegetables, tomatoes, meat, processed meat and poultry.
The intent behind this policy is to support the development of nationally-based companies and local production. As the governor of the central bank mentioned: “the time has come to stop making the country a dumping ground for all sorts of imported junk from all over the world.” (http://www.vanguardngr.com/2015/07/central-banks-forex-restrictions/).
However as mentioned by organisations such as the Chambers of Commerce, this type of regulation affects goods which are critical for local food processing companies. Such developments create the incentive and need for FMCG and food processors in Africa to develop new projects to develop new local sources of production for local consumption and to secure their supply chains. They need local food supply chains to be developed quickly but these still need the same standards used elsewhere, such as GlobalGAP.
For many companies, including both African food processors and international FMCG companies, developing local agricultural projects is not only challenging, but also does not fit with their core-competencies or investment priorities. As a result they need expertise in areas such as agricultural investment, agricultural financing, farm management, sourcing from small-holders, infrastructure development (e.g. irrigation) in order to secure the development.
In Nigeria, and elsewhere, one solution is to establish a business in which key value chain participants and local stakeholders all have a stake in the success and sustainability of the venture. Creating such ventures is not easy, but provides a powerful framework and incentive for all the necessary players to work together.
ImpactAgri specialises in the creation of complex agricultural value chains involving multiple partners. To discuss this article or to for more information on ImpactAgri’s services for land owners and food companies, please contact: David.Lyon@impactagri.com