Don’t Restrict Forex On Imported Milk – NECA
The Nigeria Employers’ Consultative Association has warned the Central Bank of Nigeria to suspend the planned foreign exchange restriction for milk importation.
This was contained in a statement issued by the association in Lagos on Thursday.
The apex bank had recently announced a plan to restrict access to forex for the importation of milk and other diary products into the country.
The Director-General of NECA, Mr Timothy Olawale, said there was a need for the apex bank to suspend the plan in the interim to enable stakeholders and companies dealing in milk diary and diary products, evolve other alternatives to meet domestic needs.
While the association said it was not opposed to backward integration in which the companies would utilise local raw materials, it advised that the government should support key players in the sector to enable them invest massively in backward integration.
Olawale said, “The CBN should in the interim suspend the planned restriction on the importation of milk and after extensive consultation with all stakeholders, revisit the timeline of the implementation of the policy to enable companies plan for alternatives.
“Local production of the product at the scale required to meet domestic needs would take between four to five years. Government should support key players in the sector to enable them invest massively in backward integration.”
The NECA boss said continuous consultation and engagement with stakeholders should be common feature of the CBN policy thrust. He noted that the CBN’s planned restriction could backfire with dire consequences on local diary businesses.
He said further, “While we understand and acknowledge the imperative for backward integration on the long term, the proposed restriction of forex is too sudden and have the potential of crippling businesses which are already struggling. Without prejudice to the long term benefits of backward integration, the short-term consequences, without a deliberate and acceptable plan by critical stakeholders could be catastrophic for local businesses in the value-chain.”
Speaking further on the need for a long term backward integration plan, the NECA boss stated that “cow husbandry in Nigeria have been proved not to be ideal for milk production but for consumption only.
“Contrary to the postulation that local cows are good enough for milk production, massive investment would have to be made for the importation of dairy cows for milk production.”
Olawale said that due to the gap that would be created between local supply and demand, unscrupulous elements would have a field day importing milk with attendant loss of revenue to government, massive loss of jobs with attendant social consequences.
He added that other consequences included capacity underutilisation as the entire food and beverage sector would be adversely affected as “many are dependent, in varying degrees, on the use of milk as intermediate product.”