CBN restricts forex for milk importation to six firms

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Central Bank of Nigerian (CBN) on Tuesday announced restriction of foreign exchange for milk importation to six companies in Nigeria.

A statement by the apex bank said the companies include Nestle, FrieslandCampina WAPCO Nigeria, Chi Limited, TG Arla Dairy Product limited, Promasidor Nigeria, Nestle Nigeria and Integrated Dairies Limited.

According to the statement, the new move is aimed at boosting local production.

CBN said that it has engaged the manufacturers because they have keyed into its backward integration to enhance their capacity and improve local milk production

“For the avoidance of doubts,” the bank said, “all established form ‘M’ for the importation of milk and its derivatives for companies other than the above for which shipment has not taken place should be cancelled immediately.”

In July 2019, the apex bank announced a plan to restrict forex for milk importation.

The announcement drew the ire of many Nigerians. While many interest groups condemned the move, others mistook the decision for an outright ban on milk importation.

In their reactions, Lagos Chamber of Commerce and Industry (LCCI) and Manufacturers Association of Nigeria (MAN) said they were not consulted.

This was contrary to the claim by CBN governor that the apex bank held several meetings with some milk importing companies, particularly representatives of Friesland Campina WAMCO Nigeria PLC, one of Nigeria’s oldest importers of milk, on the issue.

Also, Director-General of MAN, Mr Segun Ajayi-Kadir, said the decision might lead to the downsizing of their staff. He said the proposed policy will also cut down on the contribution of the manufacturing sector of the economy to the country’s gross domestic product.

Ajayi-Kadir described the CBN’s decision as unilaterally taken ”without due consultation with the operators in the dairy industry”.

“It is a fact that backward integration is the way to grow an economy, but there is a need to be strategic and deliberate about the way to implement the measure,” the MAN DG said.

CBN Explains

But the CBN later explained its restriction policy.

The bank said “there is neither a plan nor a decision to ban importation of milk into the country,” an act it said it had no legal power to take.

“Arising from the success of the restriction policy, we approached some milk importers, as we did for rice, tomato, and starch and asked them to take advantage of CBN’s low-interest loans to begin local milk production instead of relying endlessly on milk imports,” the statement said.

“Today, although there have been some successful attempts at producing milk locally, the vast majority of the importers still treat this national aspiration with imperial contempt.

“For the avoidance of doubt, milk importation is not banned. Indeed, CBN has no such power. All we will do is to restrict sale of FOREX for the importation of milk from the Nigerian foreign exchange market.

“We wish to reiterate that we remain ready and able to provide the needed finance to enable investors who genuinely want to engage in milk production.”

 

PT