The Central Bank of Nigeria (CBN) has lifted restrictions on the importation of milk and dairy products. The restriction has been in place to February 2020, when the CBN announced that milk importation would be limited to six companies: Nestlé, FrieslandCampina, Arla, Promasidor, Chi (Coca-Cola) and Integrated Dairies.

Nigeria spends approximately $1.5bn a year on dairy imports. Dated March 12th 2024, the new circular also updates products eligible for access to fx. Some domestic companies have briefed against the change and its impact on investment in local production: they have argued that while increasing competition and broadening market access, it could lead to higher retail prices for milk and dairy products.

The lifting of the restriction is designed to alleviate pressure reduce shortages of food in Nigeria. It isn’t clear yet what effect it will have on food prices and it is not seen as a strategic move to curb food price inflation. As such, because the Nigerian government continues to want to drive local investment in dairy production most analysts locally see the lifting of the restrictions as a temporary measure.

The depreciation of the Naira has exacerbated a longstanding issue with access to fx and acted as a catalyst for food price inflation, which in turn has meant considerable pressure on low income consumers in terms of access to basic necessities, including rice, milk powder, flour.

For dairy, the Nigerian government faces a strategic impasse: it needs to find ways to promote investment in the local dairy value chain but those investments are slow to implement and typically do not keep pace with demand. But fx restrictions are a crude measure of control, don’t really work and ultimately work against consumers.