CBN’s intervention to save palm oil industry
The Governor of the Central Bank of Nigeria, Godwin Emefiele’s call the other day on state governors to assist in stopping the outflow of about $500 million annually for the importation of palm oil should not be ignored by relevant stakeholders.
The call included the need for the provision of land for production of palm oil and its derivative value-chain products. Nigeria’s annual requirement for palm oil is about 2.5 million metric tonnes while only 1.25 or 50% is domestically produced, leaving a gap of 1.25 million metric tonnes that is filled via importation thus, giving rise to foreign exchange exposure of $500 million annually. Nigeria, a country blessed with all that it takes to produce palm oil in quantities that will not only satisfy domestic demand but also a significant surplus for exports, has been experiencing negative gaps where domestic need outstrips domestic supply. Consequently, the country has been expending some $500 million annually to fill them about 1.25 million metric tonnes of palm oil shortages being experienced in the country.
The shame that such gap and the attendant foreign exchange spending bring to the country is unquantifiable especially given that, prior to the advent of crude oil exploitation in the country, one of Nigeria’s main economic products and foreign exchange earners, was palm oil. Indeed, palm produce was dominant among the country’s commodities for exports. Unfortunately, following the discovery and mining of crude oil in commercial quantities, palm oil production by the country has been relegated. And this is to such an extent that Nigeria has not been able to produce sufficient quantities to cater to her domestic needs. It has been so bad and indeed scandalous that the country has to rely on importation to meet as much as 50% of her local needs, at such a huge cost of $500 million per annum. It should also be shameful that the countries that benefited from oil palm seedlings from Nigeria to develop their oil palm sector are now exporters of the product to Nigeria.
At times like the one the country is currently in, where every effort must be made to enact economic revival, diversification, growth, and development, there is, therefore, the dire need to look towards the areas of the country’s comparative advantage. Thus, the need for all hands to be on the plow to bring about the glorious days and years when Nigeria used to compete favourably as one of the world’s largest producers of palm oil.
Towards accomplishing this aspiration, it is imperative that all challenges that face oil palm cultivation and palm oil production be identified and strategically addressed. It is only in doing this that the country’s expectations will be met.
There are many specific benefits, apart from aiding general economic emancipation, that favour serious attention being paid and actions taken towards revival or revamping the palm oil sector of Nigeria’s economy. It will make appreciable contributions to reduction in the number of unemployed (especially in the rural communities) and the rate of unemployment in the country. It also promises to raise the contribution of the agricultural sector to the nation’s Gross Domestic Product (GDP), the growth of which has either remained abysmal over the greater part of some decades now. Furthermore, when the country is able to produce 100 per cent or more of her palm oil requirements, the $500 million being spent on the importation of 1.25 million metric tonnes of the product will be saved for other more critical needs including critical infrastructure. It will also ease, to a large extent, the pressures on Balance of Payment (BoP) and inflation rate, which will ultimately tend downwards. There is equally no doubt that if the production of surplus palm oil dovetails into being used in local manufacturing, Nigeria’s manufactured goods will become more competitive as against when manufacturing depends wholly on imported raw materials.
It is, therefore, gratifying that the CBN did not just request that state governments take care of the palm oil production issues alone but it indeed, showed its own commitment by offering or pledging to provide N69 billion for facilitation and development of the sector. This is aside from the N30 billion it had already disbursed to the palm oil sector under the Oil Palm Development and Expansion Initiative. While these are commendable, they should serve as serious and noteworthy motivations for the state governments and other stakeholders (corporate organisations, individuals, small and medium scale enterprises and even smallholder producers) in the palm oil production industry.
With everyone involved, the road to catching-up with major world palm oil-producing countries like Malaysia, Indonesia, and Singapore, will be opened in the best interest of the country. The governors (especially of the rain belt states where oil palms flourish), should heed the clarion call by the CBN and ensure Nigeria, once again, takes her rightful place in the comity of palm oil producers in the world.
In seeking to return Nigeria’s palm oil production to the prime global stage, a robust medium to long-term strategic plan should be crafted and emplaced. The plan should be inclusive and the involvement (roles) of all relevant stakeholders should be specified and where possible, assigned. Concerted implementation of the plan by all is essential for success. It is also very important that mechanisms for effective coordination, monitoring, and periodic evaluation are put in place. The training and retraining of the human capital to implement even in the rural communities, both the plan and palm oil production, are essential too.
Whereas the CBN has set the tone with the provision of financial resources with N69 billion, which may not be adequate for revamping the oil palm sector of the economy, the door has been opened for other stakeholders to show presence and commitment in this new drive for a Nigerian economy where palm oil, albeit agriculture and its numerous value chain products, will regain its prime place.