Summary
Pressure is mounting on the Nigerian government to abandon its supplementary levies on wheat imports given the failure of the Cassava Bread Development Fund to train and promote investment in the use of blended cassava/wheat flour in bread and other bakery products. Despite the levies Nigerian wheat imports have grown 30% since the 2012/13 season. The experience in the Nigerian, cassava/wheat sector highlights the need for a fully integrated approach to the development of supply chains, which encompasses multi-stakeholder buy-in prior to the launch of specific trade policy measures. The isolated and injudicious use of trade policy interventions can be counter-productive.
Since 2012 the Nigerian government has had in place a 15% import levy on wheat grain, taking the import tax to 20% and a ‘65% levy on wheat flour imports to increase the effective duty from 35% to 100%’ (1). The levy was intended to support a programme for the development of Nigerian cassava production as a means of both reducing imports of wheat and enhancing on-farm earnings and employment. A key element of the Cassava Bread Development Fund programme was the training of over 400,000 master bakers in the ‘new modular technologies that would be acquired to boost cassava flour processing’ (2). However it has been revealed by the Association of Master Bakers and Caterers of Nigeria (AMBCN) that only some ‘1,584 bakers have been trained and only 151 bakers have been partially equipped’ (2).
This has led to calls from the AMBCN for the Federal Government to ‘urgently address the high price of commodities like sugar and flour’. According to AMBCN 50kg of flour in Nigeria costs $30.60 while in Tanzania it costs only $12.51. AMBCN representatives have spoken of a possible nation-wide withdrawal of baker services if the government does not respond to their requests for the removal of policy measures which increase input costs in the bakery sector (2).
According to USDA analysis while the Nigerian governments (GON) composite flour programme which substitutes cassava flour for wheat flour, ‘offers a 12% tax rebate to bakers that will blend cassava flour with wheat flour for bread…..the full enforcement of cassava substitution policy is likely to stay on hold until GON, flour millers, bakers, and other stakeholders, are able to develop composite flour for processing quality flour-based products consumed by Nigerians’ (3).
Against the background of these shortcomings according to USDA figures, in recent years Nigerian wheat imports have continued to grow, despite the higher levy charged. Since August 2012 imports have risen 30.4% from 4,140,000 tonnes to 5,400,000 tonnes
Nigerian Wheat Imports and Consumption (‘000 tonnes)
| 2012/13 | 2013/14 | 2014/15 | 2015/16 | 2016/17 | 2017/18* | 2018/19° | % + | |
| Imports | 4,140 | 4,550 | 4,750 | 4,410 | 4,972 | 5,200 | 5,400 | +30.4% |
| Consumption | 3,970 | 4,120 | 3,914 | 4,070 | 4,632 | 4,860 | 5,060 | +27.5% |
Source: USDA Nigeria Grain and feed Annual Report – multiple years * estimated ° projected
Major quality and price competitive issues are faced in the Nigerian cassava sector, despite Nigeria being the largest cassava producer in the world. The team leader of the Market Development Programme in the Nigeria Delta (MADE), a body promoting cassava value chain development claims ‘local processors are not investing, most of them just go to a fabricator to pick things up in shelves without paying much attention to the right quality’ (4).
This quality issue, alongside a lack of investment and training would appear to be what has hamstrung the programme for the partial substitution of cassava flour for wheat flour in bread production.
Press reports further suggest ‘the price of fresh cassava tuber from the farm is higher than the price of imported processed cassava chips’, given low yields and poor post-harvest handling in Nigeria (4).
| Comments and Analysis Shortcomings in the Cassava Bread Development Fund programme highlight the need for a fully integrated approach to the development of supply chains and the difficulties faced in large infrastructure poor countries such as Nigeria.The experience since 2012 suggests trade policy measures are often implemented prematurely, before other necessary integrated sector development elements are in place. These necessary elements include effective stakeholder bodies which have bought-in to the broad policy direction and which can be engaged in ensuring an integrated approach to addressing the sector development challenges faced is adopted. This premature implementation of trade policy measures arises in part from the relative ease with which such measures can be announced. However their isolated and injudicious use can lead to the discrediting of government trade policy interventions and intensify pressures for a laissez faire trade policy. |
Sources:
(1) USDA GAIN Report, ‘Nigeria Introduces Levy on Wheat Grain Imports’, 31 August 2012
https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Nigeria%20Introduces%20Levy%20on%20Wheat%20Grain%20_Lagos_Nigeria_8-31-2012.pdf
(2) Bakeryandsnacks.com, ‘Nigeria’s bakers call for wheat tax to be scrapped following failure of cassava bread program’, 27 April 2018
https://www.bakeryandsnacks.com/Article/2018/04/27/Nigeria-s-bakers-call-for-wheat-tax-to-be-scrapped-following-failure-of-cassava-bread-program
(3) USDA GAIN Report, ‘Nigeria Grain and Feed Annual 2018’, 12 April 2018
https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Grain%20and%20Feed%20Annual_Lagos_Nigeria_4-12-2018.pdf
(4) Business Day, ‘Nigeria’s cassava producer status dented as starch, flour imports hit $654mn’, 11 April 2018
http://www.businessdayonline.com/nigerias-cassava-producer-status-dented-starch-flour-imports-hit-654mn/