Cocoa Processors Blast CBN, Smugglers Over Loss Of $2.2bn In Export Sector

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The Federal Government’s plan to diversify the economy from oil through increased exploitation of non oil export might not be realised as the necessary incentives are being frustrated by the policies of the central bank of Nigeria ( CBN) and the menace of smugglers.

Stakeholders in the cocoa processing sub sector said their verdict against the monetary authority was hinged on the failure of government to implement the expansion projects for cocoa processing and manufacturing leading to the decline in the country’s cocoa value addition programme in recent years.

According to them, a conservative estimate on losses incurred by the nation currently is put at $2.2billion per annum.

As if this was not enough, the processing segment of the cocoa industry is currently being choked by a N50 billion debt owed commercial banks in the country. Available records reveal that out of eight cocoa processors, only two run by expatriates are fully in operations, an indication that the local processors are either struggling or out of operations.

Key players in the industry said, unless a well defined policy for processing of agricultural commodities is put in place, the country would continue to export raw cocoa and would, in the process, lose revenue available through value addition.

Records from global cocoa improvement agencies reveal that the world chocolate market is currently valued at $110 billion and Nigeria hardly benefits anything from this figure as the processing and marketing of the commodity are in the hands of foreign investors.

However, Daily Sun learnt that Nigeria’s cocoa production has dropped from 248,000 metric tonnes (MT) to 190,000MT, forcing investors and farmers to demand huge investment in the sector. Farmers link the drop in cocoa production to an increase in the number of unreplaced old and worn-out cocoa trees, as well as aging farmers, whose average age is 60 years. Besides, smuggling of cocoa beans is also linked to the drop.

In 2016, Nigeria dropped from 3rd to 7th position in the world cocoa producers. But farmers and processors identified the CBN’s policy as the major cause of the country’s relegation to the seventh position among cocoa producers in the world.

Daily Sun learnt that the monetary policy of the CBN has negated exporters from bringing their proceeds back into the country, and exporters borrow money at 25-29 per cent. And when bringing back their proceeds, they buy at the prevailing market rate and there are no palliatives or incentives for the exporters.

Executive Director, FTN Cocoa Processors Plc, Akin Laoye, said it doesn’t make sense to start exporting the nation’s basic raw materials without processing and add value.

He added: “when you process, you add value and that value addition also makes money in terms of value of the product that comes out. So if all the factory in Nigeria is not working, it means that our potentials of what we can sell for processing is lost and there are some other benefits, for instance, when you add value, you use industry in employing people and when you are now shipping just your basic raw materials, it means the jobs in Nigeria are basically exported out of the country.

“It doesn’t make sense in this age we are now for any country just be dealing with basic raw materials when it has huge population that are unemployed. Everybody is looking at industrialising their nation, why is Nigeria not doing that? Nigeria is making its own nation under-industrialised by simply making the cocoa to go out. So a lot of opportunities and potential are lost.

When the industries are not growing, we are just basically acting as if we are still in the 16th century when people were just moving raw materials outside the country, feeding and building the companies in Europe and America, that is why we are losing so much money,” he added.

He said cocoa can’t be dropped when there is no major outbreak diseases like blackpod diseases etc. Explaining that what is happening is that there are some smuggling taking place in the cocoa industry, meaning there are undocumented exports.

Speaking with Daily Sun, President, Cocoa Association of Nigeria (CAN), Sayina Riman, said there should be general mechanism for Nigerians to consume the cocoa being produced in the country so that Nigeria can align for foreign exchange to value addition.

Said he: “Nigeria has the population of over 180 million. If 20 per cent of Nigerian take 500 grams in a month, we would have consume more than 90 per cent of what we produce. That is a table market for a local industry. But all we do is to be able to add addition and take to price takers on the international market. You find out that that is unsustainable because of inherent factors such as finance above the high interest rate, machinery coming and they are coming with foreign exchange, selling and bringing a price taker, which means you are going to compete with those that have better funding, better machinery and cheaper machinery with subsidy.

“We are working to get out of the challenges and we need a strong consumption base in Nigeria. We want to start that consumption base with the school feeding program of the Federal Government because cocoa has a lot of benefits for children and adult.”


 

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