The central bank of Nigeria is planning to extend a low-interest credit offer to local milk manufacturers to deter imports after curbing the sector’s access to forex.
After the currency restriction was announced this week, the bank said in a declaration that it had met with milk importers to give them inexpensive credit to try to increase production locally rather than rely on “endless” imports.
The bank also provided inexpensive credit to rice, tomato and starch importers for the same purpose, aimed at reducing imports of products that can be manufactured locally and preserving dollar reserves.
Nigeria spends more than 1 billion dollars a year on imports of milk.
President Muhammadu Buhari has made it a key policy to diversify the economy away from oil, but a recent recession has slowed plans, cut government revenues, and caused a series of devaluations of currency.
The government is trying to revive the economy, but loans to companies have been flat, prompting the central bank to announce a series of measures directed at forcing banks to give credit to revive the economy.
Nigeria’s interest rates have been double-digit as the central bank struggles to reduce inflation, promote the naira currency, and maintain elevated bond returns to attract foreign investors.
However, it offered subsidized credit to particular industries such as agriculture and manufacturing while retaining a strong benchmark rate of 13.5 percent.
For most of what its 180 million population consumes, Nigeria depends on imports. In 2015, the central bank limited access to forex for 41 products that it said could be manufactured in Nigeria.
The central bank said the concept of adding milk to the forex restriction list stemmed from the monetary limitation policy’s achievement and the big amount spent on imports.