The Central Bank of Nigeria (CBN) plans to extend a low-interest loan offer to local milk producers to discourage imports after it curbed access to forex for the sector.
The apex bank said in a statement that it had met with milk importers, after the currency restriction was announced this week, to offer them cheap credit to try and boost output locally instead of relying on “endless” imports.
Keen to reduce imports of products that can be produced locally and to conserve dollar reserves, the bank has also offered cheap credit to rice, tomato and starch importers for the same purpose.
Nigeria spends more than $1 billion per annum on milk imports.
President Muhammadu Buhari has made diversifying the economy away from oil a central policy, but a recent recession has slowed plans, slashed government revenues and triggered a series of currency devaluations.
The government is seeking to revive the economy, but lending to businesses has been flat, prompting the central bank to announce a series of policies aimed at forcing banks to give credit to help jump start the economy.
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Interest rates in Nigeria have been stuck at double digits as the central bank struggles to curb inflation, support the naira currency and keep bond yields high to attract foreign investors.
But it has been offering subsidised credit to specific sectors such as agriculture and manufacturing while maintaining benchmark rates high at 13.5%.
Nigeria relies on imports for most of what its 180 million population consumes. In 2015, the central bank restricted access to forex for 41 items which it said can be produced in Nigeria.
The central bank said the idea to add milk to the forex restriction list arose from the success of the currency restriction policy and the large amount spent on imports.
