CBN milk ban could worsen the herder insecurity crisis

The Central Bank of Nigeria’s (CBN)’s impending forex ban on milk imports could worsen the herdsmen-induced insecurity in Nigeria. Ostensibly communicated to manufacturers by the apex bank in meetings, this will exclude the $1.2b of milk imports from the official forex window. Dairy products will join forty-seven items already excluded from the CBN-supplied forex.

At face value, it might seem positive for growing Nigeria’s dairy production. However, does this meet the test of holistic and national economic-security thinking? The policy may prove economically illiterate and could undermine President Buhari’s bid to support cattle-rearing and associated jobs.

Cart before the horse
Nigeria’s herder-linked insecurity is the elephant in the room. Government-led initiatives to help herders and local dairy production will benefit from inclusive stakeholder dialogues. The abruptness of the CBN’s announcement, perhaps well-intentioned, is wrong-headed. There are clear facts to support this assertion.

First, the exclusion aims is to encourage dairy producers to invest in local ranches. The problem though is that Nigeria’s cattle are among the least prolific in the world. This explains the embrace of imported milk. The country failed to modernise its archaic system of grazing cattle herds over vast distances. Much of the animals’ intakes are expended on excruciating commutes.

It is no surprise that the cattle produce only a fraction of production in ranch-based systems and cooler climates like Australia, Canada and New Zealand. Nigerian cows produce 1.5 to 2 litres of milk per day compared to 100 litres in some countries. Even Kenya’s, which is more temperate, produce up to 30 litres per day. Nigeria’s beef quality, as for much of West Africa, is considered among the worst globally.

Contrast this to Argentina. The country leads quality beef exports with its optimal conditions. Its cows undertake minimal to no commute, eschew stress and hence efficiently use consumption. They deliver milk and beef so tender that they are globally coveted. New Zealand accounts for 20.5% of world milk exports valued at $5.5 Billion. The US earns $7.3 Billion for its 14.7% share of meat exports. Nigeria barely produce enough to feed its 200 million-strong population. Our approach to cattle-rearing is stuck in the past.

Second, Nigeria’s high energy costs will undermine fresh milk preservation which this policy shift requires. For decades, dry (powder) milk has been the default choice for Nigerians. They are more affordable and durable given epileptic power supply. The generations-long dependence on dry milk intensified from the late 1980s, in tandem with the erratic grid-supplied electricity. If the CBN proceeds without improvement in energy access, Nigerians will struggle to store milk safely in a country where power access is at a paltry 45%.

Besides the higher cost faced by consumers, serious public health concerns also lurk. Reliable refrigeration of dairies for human consumption is key. Moreover, the important nutritional gap filled by powder milk use by vulnerable Nigerians is grossly underappreciated. Lower income homes buy dry milk in smaller, more affordable sachets, thereby making this component of a healthy diet widely available to millions. Also germane is the well-being and safety of infants in poorer families. These rely on locally produced powder to meet infant milk needs with bottle-feeding. Even without more of the counter-productive policies, 7.3 million Nigerian children under the age of five today suffer from Severe Acute Malnutrition!

Third, if the government’s aim is to help the cattle-rearing industry, as any reasonable government should, then Buhari and CBN governor Emefiele should be careful what they wish for. Preparing the ground adequately will be far better than playing to the gallery to little positive effect. The strong-arming of milk producers to redirect resources into inefficient milk production will likely provoke dire consequences.

Sinking, not waving
On the one hand, current milk producers will be likely forced to exit because of sub-optimal conditions that they are saddled with. If balanced, workable proposals for improving local milk production are not forthcoming from government, more operational handicaps should not be grafted onto existing constraints. On the other hand, those not forced out will likely turn to capital-intensive methods. Precisely because ranching to meet the modern competitive needs of big dairy producers is a technology-intensive industrial activity.

Having been cajoled into ranching, better groomed cattle owned by dairy producers will deliver bigger, better beef. They will likely sink small and medium scale herders which government purports to help. Undermined in this way, herdsmen’s sense of insecurity is likely to fester. Forcing inefficient local milk production onto big dairy producers is liable to a twin deficit: that of economic under-performance and heightened security vulnerabilities. The dairy operators, their efficiency and cost-savings from imported milk undercut in the meantime, will still be unable to turn Nigeria, given its hotter climate, into a milk-exporting superpower!

I find it hard to believe that this is the unintended consequences that the government is contriving to achieve. Particularly in light of Nigeria’s recent signature of the Africa Continental Free Trade Agreement (AfCFTA), we need to proceed cautiously. Local food processing is a relatively low-hanging fruit for Nigeria in terms of developing competitive clusters to maximise AfCFTA. Rash protectionist lurches, including imported milk ban without viable alternatives, are a quick way for the ship of Nigeria’s continental trade to start taking in water before it has even sailed.

On milk and much else, we will be well-advised not to foolishly lock-in inefficiencies with ill-conceived policies. That will undermine stakeholders, leave us divided and unable to leverage comparative advantages. Short of targeted local production, government-engineered ranching for milk hardly adds-up economically. With diligence, we could perhaps ranch our way to competitive beef production. Which isn’t the same as the dairies now in the CBN’s cross-hairs.

Doing our homework
The government can create enabling conditions with well-thought-out, comprehensive policy frames to support private-sector-led ranching. This will require a lot more in the way of studying and analysing planned actions and likely multi-vector consequences, including on security. Evidence based policy-making is required on a level not yet seen under successive Nigerian administrations.

Also needed is inclusive stakeholder dialogue. States will have to be properly consulted. The governors are legally vested with powers to control all land within their boundaries by the Land Use Act. The private sector, expected to spearhead investments, must be carried along. We need to think carefully about incentives for all impacted stakeholders, especially communities that choose to host ranches. Recent proposals to consider token payments for grazing-land access should not be dismissed. It is one promising avenue to create shared-value around grazing. Security guarantees with shared responsibilities are just as essential.

The recent spate of kidnapping and killings allegedly masterminded by rogue elements or cohorts within Fulani cattle-herding groups needs creative management by government. Between 2016 and 2018, about 3,641 persons were killed in clashes between herdsmen and farmers. 57% of these deaths occurred in 2018 alone. About 685 persons were reportedly kidnapped in the first quarter of 2019, with roughly 546 of these linked to Fulani herdsmen.

Next level rhetoric, mounting anxiety
Nigerians are anxious about herdsmen and broader insecurity. The explanations are socio-economic, physical as well as psychological. Policy pronouncements, including those on supposedly routine economic policy-setting should be filtered through both economic and national security lenses. This is the 360 degree human-security-based policy-making required to meaningfully transform Nigeria.

The Buhari government’s rallying cry on taking Nigeria to the “next level” points in this direction. Though ultimately it demurs at the actual point of meeting the crucial tests of citizens’ voice as freedom and security. Subjecting all major government pronouncements to the requirement of policy evidence and citizen inputs and consultation, rather than handed down as whimsical imposition, will represent a welcome first step to resolve mounting challenges. This is the touchstone of sound and humane public policies framed by accountability ethos.

Nigeria will profit handsomely when policymakers and elected representatives – including the CBN – see reason for policies to emerge in consultation, not decreed by pronouncement or yanked from the air. Important policy proposals should not come out of the blues without due consultation with affected citizens.

We are ripe for a new normal in the broader arena of governance. Without joined-up thinking across security and economic governance, pronouncements such as the CBN’s on banning milk import may stoke future insecurity rather than provide needed economic succour in the immediate. This is the only viable route to inclusive national stability.

Dr Ola Bello is Executive Director, Good Governance Africa (GGA). He holds first class BSc Honours and Mphil and PhD degrees from University of Cambridge. Ola is a member African Union’s technical advisory group on mining.