Economic experts have differed on the latest Central Bank of Nigeria’s (CBN) decision to exclude six milk importers from the list of banned companies, that based on the apex bank’s previous monetary stance, cannot access Foreign Exchange (Forex) through the official window to import dairy products.
Specifically, some experts commended CBN’s policy as aimed at incentivising entities that have invested hugely in developing the local dairy value chain since the imposed ban on milk importers on Forex access since 2019.
However, others argue that the apex bank should have first published the conditions to be met by affected companies, after which those who fail to meet them could be denied Forex access for dairy imports.
The CBN had in a circular issued on Tuesday, February 11, 2020, signed by the Director, Trade and Exchange, Dr. Ozoemena Nnaji, listed FrieslandCampina WAMCO Nigeria; Chi Limited; TG Arla Dairy Products Limited; Promasidor Nigeria Limited; Nestle Nigeria PLC (MSK only) and Integrated Dairies Limited as companies which can access Forex for milk import and barred other companies from accessing Forex officially to import milk.
In the circular, the apex bank’s Director, Corporate Communication, Isaac Okorafor, explained that the bank engaged the six companies because they showed sufficient willingness and ability and had keyed into the CBN’s backward integration programme in order to enhance their capacity and improve local milk production.
Okorafor further explained that the objective of the bank in that sector was to increase milk production in the country from the current 500,000 metric tonnes to about 550,000 metric tonnes within the next 12 months.
Commenting on the policy directive, an economist at the University of Nigeria, Nsukka (UNN), Mr. David Aku, said it was important Nigeria made deliberate policies to spur local production of financed products to create employment.
Mr. Aku said, “The CBN’s restriction on Forex on the 42 items is good. It has led to some industries springing up. I think this decision on dairy farmers is also commendable. At the end of the day, we will self-organised our dairy and milk industry. This will impact the economy hugely and create thousands of jobs.”
He added that, “The companies so granted waivers will perhaps in the near future be included on the list of companies banned. So, it is a matter of time before a full restriction would apply.”
In his reaction, an economist and lecturer at the Lagos Business School (LBS), Dr. Bongo Adi, said it was key for the CBN to have first set the parameters and advertised same.
Dr. Adi said, “I am not in the mind of CBN. I do not know the parameters they used to remove those companies from the Forex restriction. If you say they removed those companies from the list on account of the fact that they have done sufficient backward integration, how do we know that?
“It is important to set the parameters. So, I think if they mean well, it’s simple. Set up what the parameters are and begin to evaluate all the firms that play in that sector. You can then pick based on that.
“We haven’t seen such, and we are told some companies have met the list. It raises a lot of questions. They haven’t done it properly. You set the standards, the parameters, the guides and what the companies need to do.”
According to the February 11, 2020, circular, which took immediate effect, all Forms “M” for the importation of milk and its derivatives by authorised dealers will only be allowed for the aforementioned companies.