Victor EzejaNigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), has warned about the negative implications of the lifting of the foreign exchange restrictions the Central Bank of Nigeria (CBN) placed on the importation of milk and other dairy products to the economy.
Prime Business Africa reports that the CBN had in a circular dates 12 March, notified commercial banks of its decision to lift the restrictions on access to FX for the importation of dairy products.
In February 2020, the CBN restricted foreign exchange allocation for milk importation exclusively to six designated companies within Nigeria.
The companies included Nestle, FrieslandCampina WAPCO Nigeria, Chi Limited, TG Arla Dairy Product Limited, Promasidor Nigeria, Nestle Nigeria, and Integrated Dairies Limited. The CBN noted that the initiative aimed to stimulate domestic milk production.
However the new circular gives an update on what can be purchased with forex and says that, with the exception of a few enterprises, all entities are no longer prohibited from importing dairy goods and their derivatives.
Reacting to the latest decision of the CBN, the National President of NACCIMA, Dele Oye, in a statement, expressed concerns over the potential ramifications of the policy change, noting that it could discourage local production which the restrictions was intended to promote in the first place.
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Oye also stated that lifting the ban could further put pressure on forex and impact on the naira that is currently experiencing depreciation, coupled with the inconsistencies observed in customs duty payment.
According to him, “We acknowledge the Central Bank of Nigeria’s efforts to refine trade policies in alignment with the evolving economic landscape.
“The decision to lift restrictions on dairy importation by all entities, barring selected companies, suggests a strategic move towards liberalizing the sector, which is commendable from a free-market perspective.
“However, as a professional body deeply invested in the growth and stability of Nigeria’s economy, we must express our concerns regarding the potential ramifications of this policy change, especially against the backdrop of the Naira’s current depreciation and the inconsistencies observed in customs duty payment.”
He further lamented that “The depreciation of the Naira has already placed a significant burden on importers, with the increased cost of foreign exchange reflecting on the final prices of goods and services.
“The recent policy shift, while potentially increasing competition and broadening market access, could also exacerbate this burden, leading to higher retail prices for milk and dairy products, ultimately affecting the end consumers.”
“In addition, inconsistent customs duty payments have been a significant challenge for businesses in Nigeria. This inconsistency not only hampers the ease of doing business but also creates an unpredictable trading environment.”
“A policy change of this magnitude requires a concomitant strengthening of customs regulations to ensure that all stakeholders are on a level playing field,” Oye added.
The NACCIMA boss recommended a phased approach that according to him, “would allow domestic producers to adjust to the new competitive landscape while preserving the value of the Naira.
“This approach should be coupled with a robust support system for local dairy farmers to boost domestic production, thereby reducing over-reliance on imports in the long term.
“Additionally, harmonizing customs duty payments to eliminate disparities and foster transparency will be critical to ensuring the success of this policy.”
“While we recognize the merits of liberalizing the dairy importation process, we strongly advocate for measures that safeguard the stability of our national currency and promote fair trade practices,” he further stated.
“We are keen to engage with the Central Bank of Nigeria and other stakeholders in crafting a sustainable path forward that benefits the Nigerian economy and its populace,” Oye reassured.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
