The CBN governor, who disclosed this on Tuesday at the end of the Monetary Policy Committee (MPC) meeting in Abuja, said the policy was to stop Nigeria’s huge expenditure of between $1.2 billion and $1.5 billion annually on importation of milk.
MPC retains all monetary policy rates
Mr Emefiele also announced the decision of the committee to retain all monetary policy parameters.
At the end of the two-day meeting held in Abuja, the CBN governor said the MPC resolved to keep the lending rate, otherwise known as the monetary policy rate (MPR), unchanged at 13.5 per cent.
Other decisions arrived at during the meeting, the CBN boss said, include retaining cash reserve requirement (CRR) at 22.5 per cent and liquidity ratio at 30 per cent, with the asymmetric corridor of +200 and -500 basis points around the MPR.
The CRR is the funds kept with the CBN as a minimum deposit a commercial bank must hold as reserves, rather than lend out.
Although most analysts expected a further reduction in the controlling policy rates, the CBN governor said the committee decided to leave them unchanged to continue to stimulate credit growth to the real sector and accelerate investment and economic growth.
End milk importation in sight?
On the speculation about the CBN’s plan to restrict FOREX allocation for the importation of milk into the country, Mr Emefiele confirmed the era of restriction of foreign exchange for milk importation would come very soon.
He said more than three years ago when the CBN introduced the policy of restricting FOREX for the importation of certain commodities into the country, milk was one of the commodities considered for inclusion in the list of 41 items.
According to him, the CBN restrained itself from going ahead with the decision to allow for sufficient consultation with various interest groups, including the importers of milk in the country.
During the consultations, particularly with FrieslandCampina WAMCO Nigeria PLC, one of Nigeria’s oldest milk importers of milk, he said the CBN offered two options.
“They were advised to adopt backward integrations of their business and begin the process of development and production of milk in Nigeria, or collaboration with the pastoralists to produce milk.
“They should either begin to acquire land to graze their cows, fatten them and extract the milk, with the complement of the pastoralists under a smallholder livestock arrangement to get milk from them,” he said.
Mr Emefiele said the CBN was convinced milk, whose importation into Nigeria goes back to 60 years, was one of those products that could be produced in Nigeria.
Local milk producers guaranteed loans
To encourage them to achieve the goal of backward integration, Mr Emefiele said the importers were assured of loan support for land acquisition, artificial insemination of the cows, and development of grazing fields.
“The CBN cannot continue to allow the country to spend $1.2 billion to $1.5 billion annually on importation of milk into the country.
“If the journey towards backward integration had started two to three years ago, perhaps the problem herder-farmer conflict we see today in Nigeria would not have been as intense as it is today,” he said.
Despite the consultations and offer of support, Mr Emefiele said it was unfortunate that after three years, ”nothing has happened”.
The CBN governor said he told a meeting of the milk importing companies three weeks ago of the need to reduce the high expenditure on milk importation into the country.
“By doing backward integration, it will help in limiting or reducing the rate of herders and farmers conflict in Nigeria. CBN is determined to make milk production in Nigeria a viable economic proposition.
“The CBN is saying if by the time FOREX is restricted for milk importation, and the importers will need a loan to acquire land, or do artificial insemination of the cows, grow the grass or produce water, the CBN will provide the necessary support
“We are getting to the end of the road for the importation of milk into Nigeria. The era of restriction of foreign exchange for milk importation will come very soon.
“If the milk importers will not change its policy, the CBN will not change its policy. CBN wants milk produced in Nigeria,” the CBN governor said.
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