By Adedapo Adesanya
As part of its efforts to drive local production of milk, the Central Bank of Nigeria (CBN) has finally initiated moves to implement the ban of foreign exchange (FOREX) access to milk importers.
According to reports of a document sighted on Tuesday, the CBN has now directed Deposit Money Banks (DMBs) in the country to stop the processing of milk and its related products on “Bills for Collection basis,” which allows milk importers to buy on credit.
It was gathered by Business Post in a circular addressed to DMBs that the apex bank has also announced that with immediate effect the mode of payment with regard to the importation of milk and its related products must be on the basis of Letters of Credit (LC) only.
According to a letter dated August 26, 2019 and titled ‘LETTERS OF CREDIT AS MODE OF PAYMENT FOR THE IMPORTATION OF MILK AND ITS RELATED PRODUCTS’ the CBN said, “As part of efforts aimed at streamlining payment modes for imports, the Central Bank of Nigeria (CBN) has directed all Authorised Dealers to discontinue the processing of imports of milk and its related products on Bills for Collection basis.
“For the avoidance of doubt, the mode of payment in respect of milk and its related products shall henceforth be on the basis of Letters of Credit (LC) only.
“Thank you for your continued patronage.”
What this new CBN directive to banks means is that the importation of milk into the country will be near impossible as importers will have to source their own FOREX which means patronising traders at the black market at a higher cost.
As earlier reported by Business Post, this will come at a higher cost and by implication, consumers will have to pay more due to the extra costs incurred by the investors.