Nigeira needs a paradigm shift to develop oil palm value chain
Ifeanyichukwu Agwu is the Managing Director of BKG Exhibitions Limited. The exhibition and conference organising company’s boss, in this interview with FEMI ADEKOYA, reflects on opportunities in Nigeria’s non-oil sector and specifically highlights the foreign exchange potential in oil palm production value-chain if explored by government and other stakeholders. Excerpts:
There are other commodities with earning potential, why the focus on the oil palm sector?
BKG organises organise exhibitions in different sectors of the economy cutting across sectors like oil palm, automobile, building and construction among others. We believe doing business is about contributions to the development of aside profit making. At BKG exhibitions, we believe very strongly in using our business in our own small way to highlight certain areas that be explored by government and stakeholders in such industries. Having seen that Nigeria used to be the biggest producer of palm produce in the world and of course due to the discovery of crude oil, we decided to revisit the case, especially now that the nation seeks alternative sources of revenue. Our PalmTech expo scheduled to hold in Enugu between Spetember 12th to 14th is being co-organised with a Malaysian firm, WorldEx Exhibitions. Leadership problems and lack of patriotism have made us neglect the agric value chains for oil.
Crude oil is failing; the income is not enough from one source, so we need to diversify. The palm oil thing is not diversification, it requires that we go back into what we used to do and see that we achieve and benefit from it. Unfortunately, after fifty years, there is no improvement whatsoever in production. The little improvement in the yields is because we have an institute that is working on seedlings in line with global practices. Nigerian Institute for Oil Palm Research (NIFOR) is of course in touch with the global standards and they are now coming up with new seedlings that can increase yields but it doesn’t end there. What about the main people who are supposed to use to those seedlings? Are they up to date with the latest technology? When you go round, you find out that the practice is still the same. What they used to do 50 years ago to extract oil is what 80 per cent of them still do now. It leads to a waste of time, labour and low production output, compared to when it is mechanised. I learnt that locally the way they do it, it would give just about 35 per cent of the oil but when done in the mechanised way, it gives about 93 per cent, which means nothing is lost when mechanised.
That is why we are organising a fair by going back to Malaysia and partnering with a Malaysian company that has been promoting oil sector for a very long time to bring about a change in production through technology. Things have really changed and Nigerians do not know about that. We have the land and the people. All we need is the commitment of all stakeholders in the value-chain to do things right.
Looking at the statistics from Index Mundi, which monitors the global price of commodities, you will discover that the price crude palm oil is higher than the price of crude oil. Looking at the potential in that sector why do you think the government is not exploring the opportunity in that sector?
Well, to be honest, I think this present administration is waking up to the call because we have travelled to almost seven to eight States of the core 14 states that have the potential of growing palm oil. We have travelled and they are really doing something there. They are beginning to realise the potential in every aspect. What we are trying to do now is to cement it by giving them a roadmap on how the system works both in technology, market and people who are going to be the off takers because they are out of trend. Some of them do not even know where to sell it, as they do not have standards. So with this event, they would be able to know where the market is, the off-takers, the quality parameters and standards, as well as species of oil palm seedlings needed for the next phase. There are species just like in crude oil whether you have Brent and WTI, so also is it for palm oil. The good thing about the palm oil is that you can choose the one you want to plant. It is not like crude oil that only one is residual in your country. So these are all the benefits that the government and the people would derive. The price of crude palm oil is higher than crude oil globally. The important thing is that it is not an oil well given out to nobody who is from a different place or who is not. It is something the locals would work on neither do you need a geology certificate to work in the palm oil sector. So the locals would benefit so as the Federal Government and the states.
Looking at the experience of government interventions in terms of other sectors like rice, cassava and the likes, how would you measure government’s commitment to its diversification agenda?
When it comes to that, government is still not concerned about the financial aspect of it. Government has not done anything and this is part of the thing we are going to push forward for them to see the need to have a change in policy because if you are financing rice, it is not the same thing with palm oil. They have different gestation periods. So, if you finance both commodities with the same interest rate, it would not work. So they need to come up with a policy that suits the palm sector as well as other sectors. This is not the responsibility of the states, it is actually the Federal Government and Central Bank that will come up with a policy that would suit the palm sector.
The issue of sustainability is a concern considering lack of access to land. With the Land Use Act at the moment, what do you think can be done to address this?
The Land Use Act, when looked at critically is not a big problem when government is involved in a project like this. Once there is oil in your community, it becomes a government thing which is still not good for the people but some kind of compensation should be paid. There are hectares of land and forest that people don’t even use, government can go there, acquire such and set the plantation there. That is why this event is very important because it has to be to an extent with the State governments in partnership because the land that is needed to plant the palm tree would not be a very small land. For it to make sense and to be mechanised, it has to be a very vast land. So with that kind of partnership and investors, sustainability can be achieved.
Beyond machinery and seedlings, what other parts of the value chain are you also looking at?
We are also exploring the markets. We are inviting all the embassies; we have checked those who import oil and those who sell equipment. Of course, they are passing the message round that the country is the next place to go to and by the time they come and all the noise we are making globally, people would begin to give attention to this. That is the most important thing because the promotion is not just a Nigerian thing, it is a global thing to those who are in this business. Nobody who is in this business in the next one or two years won’t know that Nigeria’s oil palm sector is back. And ready for investment.
What is the investment potential that the fair is likely to bring into the country?
Oil palm is more expensive that crude oil. How many tonnes do we produce yearly compared to other countries. The lifespan of palm oil is 90 years. It is even cheaper to invest in palm oil and beneficial than building a house because that is why we call it generational investment. It is going to be there for generations not like other petty investments. How much does it cost government to buy 200 cars or tricycles to give out and after six months you won’t see the tricycles again? You go to orthopaedic hospital, half of the drivers are there getting their legs hanged. So what is the government really achieving by making them poorer the more. However, if the government sets up an oil palm plantation, such people will have jobs, while capital flight would have been avoided. There is no waste in palm just like crude oil. In oil palm, everything is useful. Like I say, this country don’t have the labour to take care of all the potential we have in Nigeria. We will import labour from other countries or workers if not labour from other countries to come and help. But see what is happening to our people on the streets. What kind of generation are we breeding? That is why we are using our business to open the eyes of government and our people to look into the oil palm sector to see the potential it offers beyond the crude oil that is causing problem to the nation.
Can you identify some of the State governments that have indicated interest and the stakeholders expected to participate in the fair?
Locally we are still working. Heritage Bank is working very well and doing a lot of work in this sector. They have listened to us and they are helping to see that this works very well and surprisingly in all honesty, a lot of States are doing well already. Abia, Delta, Edo, Enugu, Ebonyi, Imo States are doing well and have huge potential in terms of commitment to the sector. We hope that the governors would really come out well and support this for their people. Okpara is remembered today because of his investment in the palm oil sector down in the East. That is why am calling on all the State governments that have the potential for palm produce to look at this and follow it.