Nigeria’s central bank has officially tightened the noose on milk importation with a restriction on access to foreign currency that covers all but six importers of the dairy.
This comes on the back of an earlier notice by the bank in July, when it disclosed intentions to add milk imports to its restricted list for dollar sales, in order to spur production in the local industry. Later in the year, the bank removed milk from the list of imports eligible under payment terms known as “bills for collection,” which allowed importers to buy on credit.
Initial speculations had suggested that the CBN would impose a total ban on access to foreign currency for the imports. But six companies were exempted because they had keyed into a backward integration program meant to enhance their capacity and improve local milk production, the apex bank said Tuesday. They include FrieslandCampina WAMCO Nigeria; Chi Limited; TG Arla Dairy Products Limited; Promasidor Nigeria Limited; Nestle Nigeria PLC (MSK only), and Integrated Dairies Limited.
According to the circular issued by CBN, the new policy takes immediate effect, as all Forms ‘M’ for the importation of milk and its derivatives by authorized dealers will only be allowed for the stated companies.
The short-term goal is to increase milk production in the country from the current figure of 500,000 metric tonnes to about 550,000 metric tonnes within the next 12 months, Isaac Okorafor, CBN’s spokesperson, said. In the long run, however, the plan is to reduce substantially the $1.2 billion to $1.5 billion spent on milk imports annually.
Diversifying the economy away from oil and reducing imports of products that can be produced locally to conserve dollar reserves have been key policy objectives of the current administration. In 2015, the central bank restricted access to forex for 41 items which it said can be produced in Nigeria.
Industry groups had been lobbying the government against the bank’s planned, and now effected, dollar curb, due to the incapacity of domestic milk production to meet local demand. Nigeria relies heavily on imports for most of what its nearly 200 million population consumes. While the annual local demand for milk stands at an average of 1.7 million tonnes, the country produces less than 600,000 tonnes locally and imports a balance of over 1.1 million tonnes.
But there is undeniable potential in Nigeria’s local milk industry that could be harnessed with deliberate and properly implemented policies, and the adoption of an intensive system of animal husbandry. In addition to the six companies that plan to invest in local production, the central bank has hinted at extending low-interest loans to local milk producers to improve production while discouraging imports.
Meanwhile, there are now 44 items on the list of restricted commodities from accessing forex at the official rate. The CBN added textile and other clothing materials to the list of 42 items last year, together with the new restriction on the importation of milk and its derivatives.