CBN approves Chi Limited, Nestle, 4 others access to FX for milk, dairy products importation

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By Kayode Tokede

The Central Bank of Nigeria (CBN) has approved six dairy companies access to foreign exchange (FX) needed for the importation of milk and dairy products into the country.

The apex bank listed the companies  as FrieslandCampina WAMCO Nigeria, Chi Limited, TG Arla Dairy Products Limited, Promasidor Nigeria Limited, Nestle Nigeria Plc (MSK only) and Integrated Dairies Limited.

The CBN made this known in a circular issued by the Director, Trade and Exchange Department, Dr. Ozoemena Nnaji in Abuja on Tuesday.

The bank explained that the development was in line with its objective to increase and improve the local production of milk, its derivatives and other dairy products in the country.

According to the circular which has taken effect, all Forms ‘M’ for the importation of milk and its derivatives by authorised dealers will only be allowed for the aforementioned companies.

The CBN in its circular noted that Form ‘M’ is a mandatory statutory document to be completed by all importers for importation of goods into Nigeria.

It is therefore, mandatory for all importers to complete and register Form ‘M’ with Authorised Dealers at the time of placing orders whether the transaction is valid for FX or not.

The bank advised importers not on the list of companies cited in the circular to cancel all established Forms ‘M’ for the importation of milk and its derivatives for which shipment had not taken place.

Last year, the apex bank had initiated moves to implement the ban of FX access to milk importers.

The move by the CBN followed a recent circular it released, where the CBN governor, Mr. Godwin Emefiele, reiterated the bank’s plan to restrict FX for the importation of milk and other dairy products.

According to Emefiele, Nigeria spends between $1.2 billion to $1.5 billion annually on importation of milk and other dairy products.

The CBN governor noted that although there were some successful attempts at producing milk locally, the vast majority of the importers still treat this national aspiration with imperial contempt.

While Nigerians were reeling the CBN’s policy move and various stakeholders reacted, the CBN disclosed that all food items would be restricted foreign exchange.

Following the new policies, milk and all food import may now officially be ineligible for foreign exchange, and importers will no longer have access to the Investors & Exporters Window (I&E) for foreign currencies required to carry out transactions.

The latest action by the CBN should not come as a surprise, and the bank had reiterated that it had already commenced the implementation to restrict foreign exchange for food and milk importers, stressing that, there is no going back.

The new CBN directive to banks means the apex bank has officially tightened the noose on milk importation. Milk importers should, therefore, brace up to prepare sourcing their own foreign exchange by patronising bureau de change or other sources.

As early stated, this will come at a higher cost and the implication is that consumers will be made to bear the brunt of the extra costs incurred by the investors.

Speaking further on the intent of the circular, the CBN Director, Corporate Communications Department, Mr Isaac Okorafor‘ explained that the bank engaged the six companies because they showed sufficient willingness and ability.

Okorafor said that those listed companies had adopted the CBN’s backward integration programme in order to enhance their capacity and improve local milk production.

He explained that the objective of the bank in that sector was to increase milk production in the country from the current figure of 500,000 metric tonnes to about 550,000 metric tonnes within the next 12 months.

In addition to facilitating easier access to funding for dairy investors, he said it was the bank’s desire to ensure that the country conserved FX, trigger economic growth and boost employment opportunities in the sector.

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