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Business - August 1, 2019

NECA urges CBN to revisit restriction of FOREX on milk importation

Godwin Emefiele, Governor, Central Bank of Nigeria (CBN)

The Nigeria Employers’ Consultative Association (NECA) has urged the Central Bank of Nigeria (CBN) to revisit its planned restriction of foreign exchange for importation of milk.

NECA made the call in a press statement on Thursday in reaction to the statement by the Governor of Central Bank of Nigeria (CBN) on the planned restriction of forex for importation of milk. It said that the apex bank should revisit the policy direction and create an environment for further engagement.

Speaking in Abuja, the Director General of NECA, Mr. Timothy Olawale stated that “while we understand and acknowledge the imperative for backward integration on the long term, the proposed restriction of forex is too sudden and have the potential of crippling businesses which are already struggling. Without prejudice to the long term benefits of backward integration, the short-term consequences, without a deliberate and acceptable plan by critical stakeholders could be catastrophic for local businesses in the value-chain”

Speaking further on the need for a long term backward integration plan, the NECA Boss stated that “cow husbandry in Nigeria have been proved not to be ideal for milk production but for consumption only. Contrary to the postulation that local cows are good enough for milk production, massive investment would have to be made for the importation of dairy cows for milk production. Mr. Olawale averred that due to gap that would be created between local supply and demand, unscrupulous elements would have a field day importing milk with attendant loss of revenue to government, massive loss of jobs with attendant social consequences. Other consequences include capacity underutilization as the entire food and beverage sector will be adversely affected as many are dependent, in varying degrees, on the use of milk as intermediate product”.

While proffering a way out of the situation, the Director-General urged the Central Bank of Nigeria to soften its hardline stance and listen to the concerns of stakeholders. He noted that “the CBN should in the interim suspend the planned restriction and after extensive consultation with all stakeholders revisit the timeline of the implementation of the policy to enable companies plan for alternatives. Local production of the product at the scale required to meet domestic needs would take between four to five years. Government should support key players in the sector to enable them invest massively in backward integration.” He concluded that “continuous and expanded consultation and engagement with Stakeholders should be common feature of the CBN policy thrust”

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