CBN Moves To Lower Prices Of Dairy Products, Ends Forex Limits

The Central Bank of Nigeria (CBN) has announced the lifting of foreign exchange (FX) restrictions on milk and dairy product imports, a policy introduced in 2020.

Detailed in a CBN circular dated March 12, 2024, this move aims to enhance affordability and accessibility of dairy products for Nigerians by allowing importers access to FX at official market rates.

Previously, a select few companies enjoyed the privilege of importing dairy products with forex obtained at government rates, leading to monopolistic practices and inflated prices. This decision to lift restrictions seeks to democratize the importation process, enabling more players to participate and fostering healthy competition in the market.

The anticipated increase in competition is expected to drive down milk and dairy product prices, making them more affordable for the average consumer. Zenith Bank confirmed this policy reversal in a notice to its customers, emphasizing the CBN’s goal of creating a more competitive and equitable market environment for dairy imports.

This regulatory shift aligns with recent efforts by the CBN to liberalize the economy and ease previous restrictions, including lifting bans on cryptocurrency transactions and easing limitations on domiciliary accounts. These measures reflect the CBN’s broader strategy to effectively regulate foreign exchange, stabilize the Nigerian economy, and support various sectors.

While the lifting of FX restrictions on dairy imports is welcomed by consumers, it raises concerns among local dairy farmers about potential negative impacts on the domestic industry. Increased competition from imported dairy products could threaten the livelihoods of local producers and hinder the growth of the domestic dairy sector.

Moreover, there are apprehensions regarding the potential creation of new monopolies if the market is not adequately regulated. Some commentators doubt whether the deregulation will lead to a significant reduction in prices, expressing concerns about the possibility of importers exploiting the system for excessive profits.

The effectiveness of this policy in democratizing the importation process and ensuring a competitive market that benefits consumers remains uncertain and will require careful monitoring and regulation.

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