Nestle Nigeria and Friesland Campina WAMPCO are reportedly planning to sign an agreement with the Federal Government and the Central Bank of Nigeria (CBN) for local milk production.
This comes days after the CBN restricted foreign exchange for milk importation to Nestle, Friesland and four companies in Nigeria to boost local production.
According to a new report, both Nestle and Friesland are expected to sign the local milk production deal with the Nigerian government and CBN on Monday.
What it means: This is expected to boost milk production within the country, as the CBN plans to increase the current figure of 500,000 metric tonnes to about 550,000 metric tonnes within the next 12 months.
Importation of milk gulps about $1.2 billion to $1.5 billion annually. Meanwhile, Nigeria’s milk production estimated at 600,000 MT accounts for only 13% of West African production.
READ MORE: Milk: NECA urges CBN to suspend Forex restriction]
Nairametrics had reported that the CBN restricted foreign exchange for milk importation to six companies in Nigeria to boost local production because they have keyed into its backward integration to enhance their capacity and improve local milk production.
This is expected to make access to funding easier for the diary investors and thereby, ensure that the country conserves foreign exchange, triggers economic growth and boost employment opportunities in the sector.
A circular by the CBN had stated that all Forms ‘M’, for the importation of milk and its derivatives shall only be allowed for FrieslandCampina WAPCO Nigeria, Chi Limited, TG Arla Dairy Product limited, Promasidor Nigeria, Nestle Nigeria and Integrated Dairies Limited.
The circular also added that, “For the avoidance of doubt, all established Forms ‘M’ for the importation of milk and its derivatives for companies other than the above for which shipment has not taken place should be cancelled immediately.”
According to the Director of Corporate Communications Department, CBN, Isaac Okorafor, the bank chose to engage the six companies because they showed sufficient willingness and ability and had keyed into the CBN’s backward integration program in order to enhance their capacity and improve local milk production.
Why this matters: As Okoroafor noted, this new program would push the increase of milk production in the country. The CBN plans to increase the current figure of 500,000 metric tonnes to about 550,000 metric tonnes within the next 12 months.
The Director also said that the bank aims to facilitate easier access to funding for dairy investors. This would be done so as to ensure that the country conserves foreign exchange, triggers economic growth and boost employment opportunities in the sector.
