The Central Bank of Nigeria (CBN) has restricted foreign exchange for milk importation to six companies in Nigeria to boost local production. This was disclosed in a circular issued on Tuesday by the apex bank and made available to Nairamterics.
The circular, which was signed by the Director, Trade and Exchange Department, Dr. O.S Nnaji, stated that CBN engaged the manufacturers because they have keyed into its backward integration to enhance their capacity and improve local milk production.
“All authorised dealers are to note that all Forms ‘M’, for the importation of milk and its derivatives shall only be allowed for the following companies. They are FrieslandCampina WAPCO Nigeria, Chi Limited, TG Arla Dairy Product limited, Promasidor Nigeria, Nestle Nigeria and Integrated Dairies Limited.
“For the avoidance of doubt, all established Forms ‘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,” the circular stated.
The aforementioned companies are said to have begun investing in local milk production in line with the CBN’s backward integration plan.
Recall that Nairametrics had reported when the CBN first disclosed plans of restricting forex for milk importation in July 2019. The bank had directed Deposit Money Banks (DMBs) in the country to stop the processing of milk and its related products on “Bills for Collection basis,” which allowed the importer to buy on credit. It also streamlined the mode of payment for the importation of milk and its related products to be on the basis of Letters of Credit (LC) only.
What this means: The new milk importation ban may lead to the cost of milk and milk-dependent products to increase thereby making consumers bear the extra costs incurred on it. Also, it might be a challenge for the milk produced only at the local level to be able to meet the needs of all consumers in the country.