Companies operating in the Nigerian economy will have to comply with regulatory policies in order to ensure the various policy interventions by the Central Bank of Nigeria yield results, writes James Emejo
There is no gainsaying the fact that the CBN, under the leadership of Mr. Godwin Emefiele has made several laudable interventions in key sectors of the Nigerian economy, particularly in line with President Muhammadu Buhari’s economic diversification objectives.
These noble initiatives include interventions in the agricultural sector where the now famous anchor borrower programme (ABP) has caused unprecedented revolution in local rice production in the country, saving the could billions of naira in food import bill.
In March, the CBN governor, citing over the $4 billion currently spent on importation of textile into the country, added all forms of textile materials to the list of items that are not eligible for foreign exchange from the official windows with immediate effect.
The intervention in the cotton, textile and garment (CTG) sector was aimed aimed at reviving the country’s once vibrant and robust textile industry, which had collapsed over the years.
Also, in March, the CBN, in furtherance of its intervention programmes in the agricultural sector of the economy, reeled out measures currently being considered to address the challenges which had stifled the growth of the palm oil industry.
Emefiele had pointed out that the move was aimed at identifying “promising approaches” to revitalise the sector and enable the country regain its position as one of the leading global producers of palm oil.
Speaking at a meeting with the governors of the South-South and South-East States, including other critical stakeholders in the palm oil industry, the CBN governor, noted that Nigeria still expends close to $500 million on oil palm importation annually.
Earlier in February, Emefiele also indicated the resolve of the Federal Government to ban the importation of tomato products into the by 2021.
According to him, the continued importation of tomato paste had resulted in massive job losses to foreign countries, a situation which had further impoverished local farmers and denied them of a better life.
At the same time, CBN governor of also buttressed the need to prohibit the importation of milk into the country in the near future.
According to Emefiele, all the policy interventions were targeted at creating massive job opportunities for Nigerians, stimulate growth and ultimately reduce the rate of insecurity in the country by gainfully employing the teeming youthful population.
However, one of the daunting challenges militating against the realisation of these objectives had been the activities of economic saboteurs who continued to circumvent policy thrust to engage in smuggling and dumping as well as outright actions to undermine the government’s policy direction.
Emefiele had on several occasions lamented that smuggling constituted a major limitation to the development of the economy.
Specifically, there had been recent outrun by stakeholders that smuggling posed a major threat to the achievements so far recorded in the rice revolution.
In April, the Chairman, Rice Processors Association of Nigeria (RIPAN), Mr. Mohammed Abubakar warned that the gains so far recorded in the rice production revolution in the country, particularly the intervention of the CBN-ABP, could be jeopardised by the activities of smugglers if not confronted head-on by government.
According to him, over one million metric tons of rice (about 20 million bags) had been smuggled into the country within the last three months.
As a result, he said Nigeria currently loses huge revenues, foreign exchange and Jobs to this menace as rice processing companies continue to shut down because of their inability to gain market access.
Nonetheless, Emefiele, had while unveiling his agenda for the next five years of his second tenure, emphasised on current plans to discourage the activities of smugglers, who bring in restricted goods into the country.
According to him, “perpetrators and their affiliated companies will be blacklisted and denied access to banking services in the entire country.”
Early in June, Emefiele had disclosed that President Muhammadu Buhari had asked CBN to blacklist any firm, its owner and top management caught smuggling or dumping any of the 43 items which are not eligible for foreign exchange.
He added that the CBN’s economic intelligence department was probing some accounts suspected to be involved in smuggling or dumping palm oil into Nigeria.
The foregoing points to the fact that some business operators in the Nigerian economy deliberately decide to disregard government policy for their own selfish interest and to the detriment of the economy in general.
The concern of the CBN in this particular regard was exemplified by Emefiele recently when he gave a chronological account of how big players in the milk industry had tried to resist policy direction on domestic milk production, rather than importation.
The CBN governor who reiterated plans to soon restrict milk importation which gulps between $1.2 billion and 1.5 billion annually, had described it as unacceptable going forward and expressed his disappointment over efforts by major operators in the sector to frustrate the policy.
In a detailed response on his position over recent reports quoting him to have been signaling the possibility of restricting foreign exchange for the importation of milk, Emefiele had submitted that:”Yes there are reports. The reports either quoting me or quoting somebody in central bank saying that there are attempts to restrict FX on the importation of milk into the country is correct. It is very correct because we believe that milk is one of those products that can be produced in Nigeria today. And you all must have heard me at different fora ask question that, we have seen the importation of milk in Nigeria before many of us were born, precisely over 60 years.”
He said:”West African Milk, Frieslandcampina that I know as the foremost importer of milk has been doing it for over 60 years. If you Google West African Milk or Frieslandcampina today even on the website, they say they have been importing milk or that they have been in Nigeria for over 60 years.
“For over sixty years, Nigeria has been importing milk. Today, the import of milk annually stands at between $1.2 billion to $1.5 billion and that is a very high import product in to the country, given that it is a product that we are convinced that can be produced in the country. And let’s ask ourselves the question. What really does it take to produce milk? Get the cow and give the cow plenty of water to drink and let the cow eat a lot of grass and the cow positioned in a place without roaming around, that cow gets fat and you can take milk out of it. The reason some says our cows are not producing much milk is because our cows roam around. They don’t have water to drink.”
Continuing, he said:”Under the pastoralist arrangement, you find out that during raining season, they are somewhere and when season recedes and dry and hot seasons come, they begin to move from where they are and as they move just as they are cows and not human beings, they consume whatever they find on their ways. But unfortunately in that process, they create destruction to farm products and farm produce in the country.
“About three and a half years ago when the policy on restriction of Fx started, we considered including milk in the list of items that should be restricted from forex, but we conjectured that based on the kind of sentiments people would show, that we should be very careful. We call in the management of the oldest milk importing company into Nigeria, WAMCO into central bank in Lagos. We held at least three meetings with them. Their MD came with one of the ladies and we held those meetings.
“We told them this would have happened but we decided not to allow it to happen, that we are trying to use the opportunity to appeal to them to backward integrate. Integrate backward and begin the process of development and producing your milk in Nigeria.
“There are obviously two schemes-either the West Africa Milk or milk importers acquire land and begin to graze their own cows and fatten then fatten them and take the milk, and of course, they can also be complemented by the pastoralist who own their own smallholder livestock farming arrangement- they can also get milk from them. Indeed, they could also be seen to be supporting the pastoralists by getting them concentrated in a place instead of moving around and provide them facilities like water or hospitals or schools; I mean, if you are in a community and you want to enjoy the proceeds of that community, there is nothing wrong in providing certain facilities to make those communities to blossom- provided with grass. Even if you sell the grass to them and the proceeds of what you get in return will be your milk to recoup your investments.
“Those are the kinds of things that we expect companies that are importing milk into Nigeria to do. Unfortunately, after three and a half years, nothing has happened. Some of them said they started pastoralist arrangement and all that, or where they go and collect milk. I was also in a meeting three weeks ago, and we said we need to take stock of what you guys are doing because we can no longer continue to spend close to $1.2 billion to $1.5 billion importing milk into the country- an item that we can produce. And to some extent, you should help us also to reduce the rate of the header-farmer conflict.
“Perhaps, if you had started this journey about three to three and a half years ago with us, by now, whereas, the herders and farmers conflict that we see today in Nigeria would not have been as intense as it is at this time.
“We would need your help at this time because we can no longer wait for you to continue to be importing this product into Nigeria because we are convinced it can be produced in Nigeria. That is our story.
However, Emefiele noted with regret that those who once supported the initiative to produce milk locally had actually began to oppose the policy direction. But, he vowed not to succumb to their antics.
According to the CBN boss:”But, of course, before we knew it, I hinted at that meeting which was the last meeting in Lagos last week Friday, that we are not going to continue to allow this process to continue where they prefer to import into the country rather than backward integration.
“Of course, certainly, what you would expect is that they went under their association and went to the manufacturers association and Lagos chamber of commerce and began to lobby. And I had heard even Muda Yusuf also commenting about milk importation.
“I keep saying this: Nigeria belongs to us, when we have policy, we want people to respect the policy of this country. We are saying that how much we spend importing milk is too high, we need to reduce it.
“We are saying that by doing backward integration, it helps to limit or reduce the rarebit herders and farmers conflict in Nigeria and we are determined to make milk production in Nigeria a viable economic proposition and we would need to support that.
“We are saying if we restrict it or by the time we do so, if you need a loan to acquire land, we would give you loan, if you need a loan to do artificial insemination of your cows or you need a loan to grow your grass, in fact, you need a loan to even product water, we would give you loan.
But that you will continue to import milk into the country, I think we are getting to the end of the road and that is basically what we discussed. I will say and I repeat that we are really getting to the end of the road and the era of restriction of foreign exchange for the importation of milk is really coming and would come very sooner than they expect.
“Lastly, in that meeting, WAMCO came and said they will join this initiative for dairy production and not only dairy production by the company but to support the activities of pastoralist.
“And after a week again, we called for another meeting: West African milk has changed its position because they has spoken to their bosses and principal wherever they are and those ones too told them that ‘we would not change policy’. If they would not change their policy, we would not change our policy. We want people to produce milk in Nigeria and that is our position on that.”
No doubt, with the current stance of the CBN of the sanctity of its policies, Nigerians can only expect some exciting times in the business environment.