CBN to ban forex access to milk importers – TheNigerialawyer

…to provide credit to cattle ranchers

The Central Bank of Nigeria (CBN) has said it will soon
implement forex restriction on milk importation, noting that the
country can be self-sufficient in milk production.

CBN Governor Godwin Emefiele stated this, yesterday, while
briefing journalists at the end of the July 2019 edition of the
Monetary Policy Committee (MPC) meeting held in Abuja.

At the meeting, the CBN held all key parameters constant with
the benchmark lending rate still at 13.5 percent.

Mr. Emefiele said the backward integration from the milk
importers in Nigeria has become inevitable and might not only
impact local production of milk but also be a panacea to the
recurring herders/farmers conflicts.

This is even as the CBN has promised that anyone willing to
ranch cattle in Nigeria and produce milk will be provided credit to
acquire land and build relevant infrastructure.

“We believe that milk is one of those products that can be
produced in Nigeria today. We have seen the importation of milk in
Nigeria for over 60 years,” he said, adding that FrieslandCampina
and West African Milk, the foremost milk importers have done so for
over 60 years.

“Today the import bill for milk annually stands at between
$1.2bn and $1.5bn…Given that it is a product that we can produce in
the country, we can’t continue to import milk,” the apex bank
governor emphasised.

“Let’s ask ourselves the question, what does it take to produce
milk? Get a cow, give it lots of water and food, position the cow
in a place without it roaming around, and milk it. The reason our
cows can’t produce enough milk is that they roam around. They don’t
have enough water to drink, and consume whatever they find. As they
roam from one place to another, they destroy farms and farm produce
and this leads to clashes,” he explained.

According to the CBN governor, “about three and half years ago
when the restriction of forex policy started, we considered
including milk in the list of items that should be banned from
forex but we conjectured that based on the kind of sentiments, we
needed to be careful.”

“At that time, we called in the management of WAMCO, the oldest
milk importer in Nigeria; we held at least three meetings with
them. We told them milk would have been restricted from forex but
we stepped it down. We encouraged them to backward integrate and
begin the process of developing milk in Nigeria,” he said, adding
that that hasn’t happened after over three years.

Mr. Emefiele said local production of milk can be in two
schemes. He explained that the milk importers can acquire their own
land and begin to ranch their cows, and of course they can be
complemented by the pastoralists who would have their smallholder
cattle farming arrangements and they can get additional milk from
them.

Secondly, he said the big milk companies in Nigeria could
support the pastoralists, get them concentrated in one place rather
roam around, provide them facilities, water, hospitals, schools,
sell them grass etc and they can get milk from them to recoup their
investments. Expert’s reaction on MPC interest rate decision

According to Lukman Otunuga, FXTM research analyst, “persistent
inflationary pressures in Nigeria have prevented the Central Bank
of Nigeria (CBN) from joining the global monetary easing bandwagon
this month.”

The CBN kept its benchmark interest rates unchanged at 13.5% in
July as the bank focused on price stability, even as economic
growth remained important.

Otunuga said: “Although a rate cut is in the pipeline, this will
be heavily influenced by inflation which has been above the target
range of 6%-9% for more than four years. With the pace of economic
growth still fragile and the nation exposed to external risks in
the form of oil volatility, it becomes a matter of “when” rather
than “if” the CBN will cut rates.

“Repeated signs of consumer prices cooling should provide the
central bank with enough ammunition to pull the trigger on a rate
cut in September.

“Given how lower interest rates will stimulate consumption,
encourage businesses to boost investments and give banks more
incentive to borrow, this could be one of the medicines Nigeria
needs to restore lost strength.”