Governor of Central Bank of Nigeria (CBN) Godwin Emefiele Tuesday declared the bank’s intention to add milk to forex restriction list sooner than expected.
The announcement came on a day that Monetary Policy Committee (MPC) of the apex bank unanimously voted to retain all the base rates at their levels for the third time since March 2019.
Emefiele had said in January that CBN may increase items on forex restriction list to 50, saying it will get more aggressive in ensuring that more items being imported were added.
Answering questions shortly after reading the communique of the 125th MPC meeting, the Governor said big milk-producing companies in Nigeria had been importing for more than 60 years and it was time for them to engage in backward integration.
“There are obviously two schemes. Either the West Africa Milk or the milk importers acquire land and begin to grace 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’s cows under a small farming holder arrangement, they can also get milk from them.
“Indeed, they could also support the pastoralists, get them concentrated in one place instead of moving around. Buy them facility like water, hospitals, schools.
If you are in a community and you want to enjoy the proceeds of that community, there is nothing wrong in providing certain to those communities to blossom, provided the grass even if you sell the grass to them.
“The proceeds of what you get in return will be your milk to recoup your investments. Those are the kind of things we expect companies that are importing milk into Nigeria to do”, Emefiele stated.
According to him, CBN would be willing to provide loans to investors in the dairy value chain in acquiring land, growing, or even producing water.
“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 importation is coming to an end, and it will come soon and sooner than expected.
On monetary policy rates, the Governor reported MPC to have decided “by a vote of all members present to retain the Monetary Policy Rate (MPR) at 13.5 per cent and to hold all other policy parameters constant.
“The decision was informed by the conviction of members that key macroeconomic indicators are trending in the right direction.
“Consequently, the MPC unanimously voted to: retain the MPR at 13.5 per cent; retain the asymmetric corridor at +200/-500 basis points around the MPR; retain the CRR at 22.5 per cent; retain the Liquidity Ratio at 30 per cent.”
On the economy, MPC projected output growth in 2019 to remain weak, peaking at 2.27 per cent, while inflation is projected at 11.37 per cent by the CBN staff projections by end-2019.
And to mitigate existing credit risk, MPC enjoined CBN management to de-risk financial markets, via the development of a reliable credit scoring system, similar to what applies in the advanced countries as this will encourage Deposit Money Banks (DMBs) to safely grow their credit portfolios.
It also called on the fiscal authorities to expedite action on expanding the tax base of the economy to improve government revenue and stem the growth in public borrowing and build fiscal buffers to avert macroeconomic downturn in the event of a decline in oil prices.
While calling on the CBN to intensify efforts at encouraging Nigerians abroad to use official sources for home remittances, it enjoined the Bank to consider introducing incentives such as the reduction of charges on diaspora home remittances into Nigeria.