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CBN To Ban Forex Sale To Milk Importers

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CBN Governor, Godwin Emefiele

Importers of milk will soon be banned from accessing foreign exchange (forex) to bring the product into the country. The new policy of the federal government was disclosed yesterday by the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele.

Already, the government has delisted 43 items from being funded from forex.

Emefiele revealed yesterday after the Monetary Policy Committee (MPC) meeting in Abuja that very soon, milk importing companies would be restricted from accessing foreign exchange for the importation of the product into the country.

He said the ban became necessary after major dealers of milk product in Nigeria failed to do backward integration by way of ensuring that they produce milk locally, three years after meetings were held with them in that regard. He said that Nigeria currently spends between $1.2billion and $1.5billion on importation of milk annually, a situation he declared was no longer acceptable.

The CBN boss said the apex bank was ready to give the importers loan to acquire land, promote the artificial insemination of the cows or production of water to make milk in Nigeria.

“But that you will continue to import milk into the country, I think we are getting to the end of the road. 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 it will come sooner than they expected,” he stated.

Emefiele further said that the apex bank was determined to reduce the cost of importing milk, stating that backward integration by the milk importing firms would reduce herders-farmers crisis in Nigeria. According to him, “we are determined to make milk production in Nigeria a viable economic proposition.”

He said that the bank had considered including milk in the list of the 43 items that were banned from accessing forex about 3 years ago, but dropped the idea after due considerations.

“We believe milk is one of those products that can be produced in Nigeria. We have seen the importation of milk in Nigeria for over 60 years. West African Milk and Friesland Campina have been doing it for over 60 years,” he stressed.

Meanwhile, the MPC has insisted that tightening the Monetary Policy Rate (MPR) is not an option, at least for now. Emefiele saidt that the decision was informed by the conviction of MPC members that key macroeconomic indicators were treading in the right direction.

All the 11 members voted in favour of the status quo as Emefiele emphasised that the CBN was not in a hurry to bring down the lending rate, saying most members expected the nation’s headline inflation to drop to between six and nine per cent to make case for loosening.

Consequently, the committee retained the MPR at 13.50 per cent; and asymmetric corridor of +200/-500 basis points around the MPR; retained the Credit Reserve Ratio (CRR) at 22.5 per cent; and Liquidity Ratio at 30 per cent.

The explanation for these measurers was that holding would increase credit delivery to the real sector and accelerate investment and economic growth. The MPC said that since interest rate was trending downward, it was safer to await the full impact of the bank’s recent policy actions on the economy before a review of the current position.

“While the focus on growth was a priority, the mandate of price stability remains sacrosanct,” Emefiele said when he presented the outcome of the two-day meeting of the MPC to reporters yesterday in Abuja. He saidthat the moderating inflation rate does not make tightening of the rates an option at this time, as the restriction on deposit money bank to create funds could curtail their credit creation capability.

…Grants Licenses To 3 New Banks

And less than two months after the CBN announced plans for the recapitalisation of the banking industry over the next five years, it has licensed three more commercial banks bringing the total number of banks in the country to 24 from 21.

The new commercial banks areTitan Trust Bank Limited and Globus Bank Limited while TAJ Bank Limited was granted a non-interest banking license.

Titan Trust Bank brings the number of commercial banks with national licences to 19 while Globus Bank raises the number of commercial banks with regional banking licenses to three. TAJ Bank joins Jaiz as Nigeria’s second non-interest bank, albeit with a regional licenses.

According to updated records for financial institutions posted on its website, the apex bank approved TAJ Bank which is located in Abuja as a non-interest bank on July 3, 2019.

Titan Trust Bank was registered in December 2018 and obtained its license in April this year while Globus Bank was registered on July 10, 2019. The two commercial banks have their addresses in Victoria Island, Lagos.

The board of Titan Trust Bank is led by former deputy governor of the CBN, Tunde Lemo, who is joined by Andrew Ojei, pioneer managing director of Zenith Bank Ghana, Alhaji Abubakar Mohammed, managing director of Syndicated Investment Limited, and Alhaji Aminu Bashir, chairman of the board of Vital Products Limited. Its management team is led by Mudassir Amray, a banker with over 25 years of global exposure across six geographies – the United States (US), Nigeria, Malaysia, Hong Kong, Singapore, and Pakistan.

Before the banking reform of 2005, instituted by ex-CBN governor, Chukwuma Soludo, Nigeria had 89 banks operating as commercial and merchant banks. With the reform, which raised the minimum capital base to N25 billion from N2billion, the number reduced to 24 universal banks.

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