Nigeria's central bank extends cheap credit to milk producers after FX ban

By Chijioke Ohuocha and Camillus Eboh
ABUJA, July 28 (Reuters) - Nigeria's central bank plans to
extend a low-interest loan offer to local milk producers to
discourage imports after it curbed access to forex for the
sector.
The bank said in a statement that it had met with milk
importers, after the currency restriction was announced this
week, to offer them cheap credit to try and boost output locally
instead of relying on "endless" imports.
Keen to reduce imports of products that can be produced
locally and to conserve dollar reserves, the bank has also
offered cheap credit to rice, tomato and starch importers for
the same purpose.
Nigeria spends more than $1 billion per annum on milk
imports.
President Muhammadu Buhari has made diversifying the economy
away from oil a central policy, but a recent recession has
slowed plans, slashed government revenues and triggered a series
of currency devaluations.
The government is seeking to revive the economy, but lending
to businesses has been flat, prompting the central bank to
announce a series of policies aimed at forcing banks to give
credit to help jump start the
economy. Interest rates in Nigeria have been stuck at double digits
as the central bank struggles to curb inflation, support the
naira currency and keep bond yields high to attract foreign
investors.
But it has been offering subsidised credit to specific
sectors such as agriculture and manufacturing while maintaining
benchmark rates high at 13.5%.
Nigeria relies on imports for most of what its 180 million
population consumes. In 2015, the central bank restricted access
to forex for 41 items which it said can be produced in Nigeria.
The central bank said the idea to add milk to the forex
restriction list arose from the success of the currency
restriction policy and the large amount spent on imports.