Uche Usim, Abuja
The Monetary Policy Committee of the Central Bank of Nigeria (CBN) on Tuesday advised the Federal Government to urgently address security challenges in the various parts of Nigeria, especially in agrarian communities to increase food production and sustain inflation that has been on a downward trajectory in recent times.
This is as all the members of the committee vote to retain all key economic parameters, with the Monetary Policy Rate (MPR) remained 13.5%, the asymmetric corridor at +200 and -500 basis point around the MPR, the CRR at 22.5% and retain the liquidity ratio at 30%.
Speaking at the end of the July MPC meeting in Abuja, the CBN Governor, Mr Godwin Emefiele said all the members of the MPC agreed on the retention because the key macroeconomic indices were trending in the right direction.
He also revealed that Nigeria’s foreign reserves now stands at $44.8 as at July, adding that the apex bank was strongly focused on growth and sustaining price stability.
The CBN Governor further advised the Federal government to expand the nation’s tax base to stem the growth on public borrowing.
He also said there was need to build fiscal buffers in the event of an unanticipated sharp drop in crude oil prices in the international market.
Emefiele reiterated CBN’s decision to guarantee greater financing for the private sector and as such advised Deposit Money Banks (DMBs) to earmark 50% of their deposits to for that purpose or risk swelling their Cash Reserve Ratio (CRR).
“Part of the considerations of the MPC is for DMBs to grant loans to SMEs. They should refocus on lending to the private sector”.
Emefiele also harped strongly on the apex bank’s plans to halt milk importation into Nigeria as it gulps between $1.3-1.5 billion annually on foreign exchange payouts.
He said adding milk into the import prohibition list was a right step in the right direction because Nigeria has capability to produce milk locally without recourse to export.
He said: “Yes, we have plans to restrict importation of milk because it can be produced here. We’ve seen the importation of this product for over 60 years. If you google the importers, you would see they’ve been here long. $1.2-1.5 billion is very high given that milk can be produced here.
“What does it take to produce milk? Get your cows, position them in an area, give them water, grass, look after their health and ensure they don’t roam around.
“Our cows don’t have much milk because they roam around. They destroy things on their way and clash with farmers. All these can be addressed if we keep them in an area.
“When we considered the restriction of milk some years ago, we also considered some sentiments. We called Wamco Plc and held meetings with them in Lagos about four years ago. We appealed for backward integration. We asked them to produce the milk here. It’s either they acquire lands and acquire cows and fatten them or support the pastoralists and get milk from them. “They can also provide them with grass and sell it to the herders and get milk in return to recoup their investment.
“Unfortunately after three and a half years, nothing has happened. Again, I was in a meeting there weeks ago. I said let’s take stock on what you’re doing because we cannot continue to pay $1.5 billion for milk importation.
“We would have reduced the farmers-herders clashes if milk importers began this move three years ago. It won’t be this much. We said we can’t keep importing it. We won’t allow this process to continue.
“If you need a loan for land, produce water, artificial insemination, etc we will support you. But full importation of milk is coming to an end. It’ll come sooner than later.
“Wamco agreed to the dairy project but after a week, they changed their position.
“If they won’t change their policy, we won’t change ours. We need to stop milk importation”, he said.
On the African Continental Free Trade Area Agreement (AfCFTA), Emefiele called for the rehabilitation of key infrastructure and resuscitation of moribund industries.
He said Nigeria should be positioned to maximise the benefits.
Emefiele also urged Nigerians in the Diaspora to use legitimate channels for their remittances and called for reduced charges to encourage higher inflows.