Nigeria Imposes Forex Ban on Milk Importers
Following a ban on access to foreign currency for Nigerian milk importers, local dairy producers have begun to emerge to fulfill the country’s demand for milk.
The Central Bank of Nigeria (CBN) announced in July that it would implement a ban on the exchange of foreign currency in the dairy markets of Nigeria, thus preventing firms from importing milk. The initiative, a form of import-substitution policy, is aimed at developing the country’s domestic dairy industry. Due to the lack of resources and ranchers, Nigeria spends nearly $2.9 billion per year on food and drink imports and anywhere from $1.2 to $1.5 billion on milk imports.
The agriculture sector of Nigeria remains underdeveloped, leading to lower quality, higher prices, and poor competitiveness in international markets. This defect is devastating to the economy, costing the country billions in imports annually to accommodate the rising demand caused by urban growth. In the past, the agricultural industry has failed to meet the needs of Nigeria’s rapidly urbanizing population due to a shortage of farmers, inadequate government funding and initiatives, and climate influences.
As of September, the restriction on the importation of milk has been implemented, but such imports cannot be banned outright. Due to a shortage of agricultural workers, the immediate result of the restriction is a severe dairy shortage and sky-high prices.
Senate President Ahmad Lawan emphasized the impact of the dairy sector’s growth on complementary industries, “If we need an economy that works for everyone, then we must invest in the agricultural sector.” In support of local agriculture, Nigerian banks are offering loans to domestic milk producers now that the government has added milk to the forex-restricted list of import items, which already includes 41other products.
Both Nigerian banks and local citizens are calling for government intervention to channel resources to the sectors that need it most. The expansion of domestic agricultural production would reap more benefits than costs, alleviating poverty and increasing employment, according to the National Veterinary Research Institute.
In the past five years, Nigeria has achieved some progress by decreasing its import taxes by 6.2 percent. The development of Nigerian milk producers will impact political decisions, and, in turn, the livelihood of agricultural workers across the country.