Nigeria’s dairy production: Will Dangote be able to milk the market?

By Eromo Egbejule, in Lagos

Posted on Thursday, 1 August 2019 19:21
Nigeria's central bank wants to promote local dairy projects, like this milk collecting centre in Dangwala Karfi village on the outskirts of Kano. REUTERS/Akintunde Akinleye

Nigeria's central bank announced the restriction of forex to milk importers, in a speculatively ambitious bid to boost the country's dairy production.

The Central Bank of Nigeria (CBN) announced the policy at the end of its Monetary Policy Committee meeting in July, ostensibly to benefit local manufacturers. There are already 41 items on the import ban list.

Under the new policy, importers will not be allowed to get forex from both official and parallel markets to bring in milk. They are likely to be forced to invest in ranching as Abuja continues to seek new ways to tackle the farmers-herders conflict in central and southern parts of the country.

CBN governor Godwin Emefiele said: “We are determined to make milk production in Nigeria a viable economic proposition. If you need a loan to acquire land, do artificial insemination, grow grass, or even provide water, we will give it to you. We are getting to the end of the road of milk production in Nigeria.”

Crying over spilt milk?

This is not the first time the federal government has tried to increase local milk production.

  • In June 2018, then agriculture minister Audu Ogbeh said the federal government was importing sperm for artificial insemination of cows across the country as part of a “milk river” project.
  • Ogbeh also previously claimed that Nigeria spent an estimated $1.2bn on milk importation annually.

Analysts have weighed in heavily on the new import substitution policy, with some calling it an attack on the poor.

  • Nonso Obikili, chief economist at BusinessDay described it as a sad state of affairs. “The CBN never looks to limit fuel imports which we spent $12.5bn on in 2018,” he wrote. “It never looks to limit cars, which we spent $944m on. It never looks to limit raw sugar, which we spent $550m on. But once it comes to food that the poor eat, then that is fair game. A sad state of affairs really.”

Africa’s richest man, Aliko Dangote, however, seems to be on course to milk the situation when the policy is eventually implemented. Last May, the Dangote Group announced it was delving into dairy farming.

Forex ban or import ban?

Following the the uproar caused by decision, the CBN quickly sought to clarify that it hadn’t banned milk importation, just access to forex.

“For the avoidance of doubt, milk importation is not banned,” read the statement. “Indeed, the CBN has no such power. All we will do is to restrict sale of forex for the importation of milk from the Nigerian foreign exchange market. We wish to reiterate that we remain ready and able to provide the needed finance to enable investors who genuinely want to engage in milk production.”

Not everyone was convinced.

  • Popular public affairs commentator Feyi Fawehinmi tweeted that there was no difference between banning an item and banning forex for it. “Since 2015, Emefiele has systemically brought the entire forex market under his control…. So if he restricts forex for any item, it is a ban.”

The bottom line: Every time Nigeria has tried an import substitution policy, it has had little success. With Dangote diversifying into the dairy sector, will he get the same monopoly status, and pioneer tax waiver, his cement company enjoyed for years?

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