‘Higher retail prices’ — NACCIMA concerned over lift of FX restrictions for dairy product imports

The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has kicked against the lifting of the foreign exchange (FX) restrictions on the importation of milk and dairy products.

On March 19, the Central Bank of Nigeria (CBN) notified banks of its decision to lift the restrictions on access to FX for the importation of dairy products.

The policy came three years after the CBN added milk and dairy products to the list of items not eligible for FX.

The apex bank had cancelled its ban on 43 items previously restricted from accessing forex in October 2023.

Reacting to the latest policy change in a statement on Thursday, Dele Oye, president of NACCIMA, said the restoration of such policy could result in the decline of local production.

Oye expressed concerns over the potential ramifications of the policy change, especially against the backdrop of the naira’s current depreciation and the inconsistencies observed in customs duty payment.

“We acknowledge the Central Bank of Nigeria’s efforts to refine trade policies in alignment with the evolving economic landscape,” he said.

“The decision to lift restrictions on dairy importation by all entities, barring selected companies, suggests a strategic move towards liberalising the sector, which is commendable from a free-market perspective.

“However, as a professional body deeply invested in the growth and stability of Nigeria’s economy, we must express our concerns regarding the potential ramifications of this policy change, especially against the backdrop of the Naira’s current depreciation and the inconsistencies observed in customs duty payment.

“The depreciation of the naira has already placed a significant burden on importers, with the increased cost of foreign exchange reflecting on the final prices of goods and services. 

“The recent policy shift, while potentially increasing competition and broadening market access, could also exacerbate this burden, leading to higher retail prices for milk and dairy products, ultimately affecting the end consumers.

“In addition, inconsistent customs duty payments have been a significant challenge for businesses in Nigeria.

“This inconsistency not only hampers the ease of doing business but also creates an unpredictable trading environment.

“A policy change of this magnitude requires a concomitant strengthening of customs regulations to ensure that all stakeholders are on a level playing field.”

NACCIMA SEEKS MEASURES TO PROTECT NAIRA

The NACCIMA boss recommended a phased approach that would allow domestic producers to adjust to the new competitive landscape while preserving the value of the naira. 

“This approach should be coupled with a robust support system for local dairy farmers to boost domestic production, thereby reducing over-reliance on imports in the long term,” he added.

“Additionally, harmonising customs duty payments to eliminate disparities and foster transparency will be critical to ensuring the success of this policy.”

Oye said the association “strongly advocates for measures that safeguard the stability of our national currency and promote fair trade practices.”

He also said NACCIMA will engage with the CBN and other stakeholders in crafting a sustainable path forward that benefits the Nigerian economy and its populace.