The Central Bank of Nigeria (CBN), at the end of its most recent Monetary Policy Committee (MPC) meeting, gave hint of a planned policy aimed at promoting the local production of milk in Nigeria. The argument behind the envisaged policy makes an unassailable case for investments in local milk production and the medium to long-term benefits of the planned policy.
It will be recalled that when the policy that placed official window foreign exchange ban on 43 items was introduced, some entrenched business interests that had benefitted from the hitherto unrestrained import policy that was a drain on the nation's foreign reserve, kicked against it. All manner of intrigues, subterfuge and even blackmail were used by these interest groups to try to upturn that decision. But the apex bank's helmsman, Godwin Emefiele, stood his ground. And Nigeria is the better for it as many products including tooth pick, which used to be imported are produced locally today with the added benefit of job creation and self-reliance in the production of items like rice for instance. Over time, Nigerians were encouraged to key in to that policy and other similar policies of the CBN that are expanding and developing the economy. Instead of yielding to disingenuous tendencies that had held the nation down over the years, the CBN under Emefiele decided to remain focused on the overarching and ultimate welfare of the Nigerian masses.
The same reaction and bound- to- be- defeated methods have trailed the policy to deny importers of milk access to official forex. Before this policy was enunciated, Emefiele took time to hold several meetings with milk importers, the first being about three years ago, after the introduction of forex restrictions on 43 items. He said in the course of those meetings that "About three and half years ago, when the policy on restriction of forex started, we considered including milk on the list of items under restriction from forex, but we conjectured that based on sentiment some people are bound to express, that we should be very careful.
The CBN Governor continued "We called on the management of the oldest milk importer into Nigeria, WAMCO into Central Bank office in Lagos. We held at least three meetings with them and we told them this would have happened but we decided not to allow it to happen, that we are trying to use the opportunity to appeal to them to do backward integration. Integrate backward and begin the process of developing and producing your milk in Nigeria".
One way of doing this Emefiele explained is for importers to support the pastoralists, get them concentrated in one place instead of moving around. Provide them facilities like water, hospitals, and schools. "If you are in a community and you want to enjoy the proceeds of that community there is nothing wrong in providing certain things for the communities to blossom. The proceeds of what you get in return will be your milk to recoup your investments."
The CBN boss pointed out that "Those are the kind of things we expect companies that are importing milk into Nigeria to do. Unfortunately, after three years, nothing has happened. If the journey was started three years ago, perhaps the herders, farmers' conflict that we see today would not have been as intense as it is this time."
He made it clear that the subsisting practices were not sustainable and will not be encouraged to continue to be a drain on the nation's foreign exchange. Emefiele admonished them that "We would need your help at this time because we can no longer wait for you to continue to be importing this product into Nigeria because we are convinced it can be produced in Nigeria.
"The farmers can acquire land and begin to graze their own cows and fatten them and get the milk, and then they can also be complemented by pastoralists who own their own small holder cows under a small farming holder arrangement, they can also get milk from them".
Surprisingly and ill-advisedly, the milk importers ignored this patriotic and economically- sound advice which has now led to the forex restrictions on milk importation. Emefiele, on the basis of the simmering resistance from milk importers, was compelled to sound tough when he said, "Nigeria belongs to us, when we have a policy, we want people to respect the policy of this country. The amount we spend importing milk is too high. We are saying, by doing backward integration, help us to reduce or limit herders and farmers conflict in Nigeria and we are determined to make milk production in Nigeria a viable economic proposition.
"By the time we restrict you, if you need loan to acquire land we will give you, if you need loan to grow your grass, we will give you; to produce water, we will give you loan. But that you will continue to import milk into the country, I think we are getting to the end of the road. I will repeat, we are really getting to end of the road. The era of releasing forex for importation is coming to an end, and it will come sooner than expected.
This policy was not well received by businesses, both local and foreign, who perceive Nigeria as a mere trading out-post condemned to receiving finished, highly subsidised and cheaper goods from abroad. Undeterred, the CBN is reiterating that the policy as it relates to the planned restriction of access to the Nigerian Foreign Exchange market by importers of milk is irrevocable. The apex bank is making it clear that Nigeria and the welfare of all Nigerians come first in all its policy considerations. Being an apolitical organization, it does not wish to be dragged into politics. The focus remains ensuring foreign exchange savings, job creation and investments in the local production of milk.
For over 60 years, Nigerian children and indeed adults have been made to be heavily dependent on milk imports. The national food security implications of this can easily be imagined, particularly, when it is technically and commercially possible to breed the cows that produce milk in Nigeria.
About three years ago, the CBN began a policy to encourage backward integration to conserve foreign exchange and create jobs for the teeming unemployed people of Nigeria. Included in this policy package was the introduction of the highly successful policy which restricted sale of forex from the Nigerian foreign exchange market for the importation of some 43 items, goods that could be produced in Nigeria. Arising from the success of the restriction policy, we approached some milk importers, like 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.
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, the CBN has no such power. All it is doing is to restrict sale of forex for the importation of milk from the Nigerian foreign exchange market. In this regard, the CBN, it needs to be emphasised, is pledging to remain ready and able to provide the needed finance to enable investors who genuinely want to engage in milk production locally.
The ongoing resort to blackmail and undue politicization through the use of social media attacks can only serve to strengthen the resolve to wean the country from the clutches of powerful and highly influential traders and dealers who have kept the masses of Nigerian people hostage to foreign consumption and condemned the youths to perpetual unemployment. It is pertinent to note that with the success recorded by the policy on the ban on forex for 43 items, this, too, has the potential to record even greater success.
To that extent, therefore, Nigerians owe themselves the duty to enlist in this vanguard to take the economy back from vested interests, make the country a productive economy and create jobs for the teeming youths.
-Kabir, an economist wrote from Abuja
Read the original article on Leadership.
As Debate Rages Over Planned FX Restriction for Milk
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