Nigeria may lose billion investments in oil palm
BILLIONS of investments pumped into oil palm sector of the economy by Nigerians, who heeded calls by the Federal Government in the last three years for private intervention, are at the verge of going down the drain.
Major stakeholders in the sector said they were at the point of bankruptcy because of unprecedented smuggling of palm oil, due to Nigeria’s porous borders, coupled with claims that they (investors) had been shut out by banks from accessing need credit facilities owing to unsettled credits and loans running into billions of Naira.
Their outcry is contained in a letter entitled: SOS to the Federal Government on illegal entry of Crude Palm Oil (CPO) into Nigeria, to President Muhammadu Buhari, under the aegis of the National Palm Produce Association of Nigeria (NPPAN) and signed by NPPAN Ambassador, Engineer Dele Olanubi; chairman (Ondo State chapter), Mr Bolarinwa Adetula and the state coordinator, Chief Abiodun Adejo.
They believe Nigeria currently loses more than $500m worth of palm oil yearly, owing to sharp practices in official circle, with the attendant consequences on the industry, warning that, “The job of millions of Nigerians are at stake if positive steps are taken to stop illegal entry of Crude Palm Oil (CPO) to Nigeria before it is too late.”
Central Bank of Nigeria (CBN) Governor, Godwin Emefile, once raised a similar alarm over increasing threats to investments in the sector, which, in the early 1950s, Nigeria had 43 per cent of the global market and derived 82 per cent of its export revenue.
Malaysia and Indonesia, the two leading palm oil producers now, obtained the seedling from Nigeria at the time it was the number one palm oil-producing nation in the world.
In the letter, the stakeholders regretted that all their human and capital outlay was currently threatened because of the increasing hostile business climate occasioned by the lackadaisical attitude of the government to its clamour for diversification of the economy and protection for genuine investors.
They noted that act of economic sabotage going on at the borders encouraged unscrupulous elements to bring in palm oil into Nigeria, with serious negative effects on local production and price index.
“The immediate effect of the whole analysis is the ridiculous prices (prices below the cost of production to oil palm plantation owners) being dictated by buyers of CPO,” they stressed.
Part of the letter read: “Three years down the line of the life of this administration, we were called upon to go back to the land to produce food and agro-allied input for our industries so as to give life to our economy.
“Our members under the auspices of the National Palm Produce Association of Nigeria (NPPAN) mobilised all its members to go back to all abandoned plantations and also encouraged the planting of new fields so as to increase the palm oil output of Nigeria, thus reducing the outflow of hard foreign exchange, as well as reducing unemployment.
“Today, the picture before the Association is as follows: We got little or no leverage from the government, critical among the expected leverage from the government are bank loans to our members nationwide;
“Our members had taken the risk to obtain loans running into billions of Naira from commercial banks and microfinance banks to reactivate abandoned plantations, within the last three years; we have output (CPO), no doubt increase tremendously within the last 24 months and the price of CPO have been stable (N300,000-N350,000) per metric tonne within the last 18 months up to October 2018.
“However, since November 2018, we have noticed a downward slide in the price of CPO and a sharp drop to (N220, 000-N240, 000) per metric tonne in January 2019, even when the season (February-June) is yet to commence. We then wonder what the price would look like during the season when CPO production is at a peak.
“The local demand has waned. Even buyers from the Northern part of the country are no longer seen in the CPO producing states of the South. We also wonder if the industries and domestic use of CPO is no longer in place in such places. No doubt, industries and domestic users or consumers of CPO are definitely getting supply from other sources. These sources cannot be other than illegal sources via smuggling through our porous borders which are also corruption-laden.
According to the NPPAN, the solution to the growing threats to the industry is for President Buhari to immediately embark on pragmatic measures that should involve all major stakeholders, so as to save the sector from imminent total collapse.
Some of their recommendations include a drastic step to stop the smuggling of palm oil into the country and that the Federal Government should follow the footstep of Malaysia by setting up a privately-driven Oil Palm Development Commission to oversee the supply and demand of CPO.
“Despite the globalization singsong by the Western world, they all protect their economies, especially where they have comparative advantages. Why then do we often open our borders to all sorts of products, both finished and unfinished like CPO? The Federal Government should protect this important industry-oil palm; more so, it is high foreign exchange earner.
“The CBN/Federal Ministry of Finance should make good their promise to restrict the entry of CPO into Nigeria, as CBN governor has said Nigeria needs to re-establish the oil palm belt in the South-South and South-East part of the country. We hope this promise would be made good to save the investors in this industry.
“If this product (CPO) is very critical to the sustenance of the economy, why can’t the Federal Government buy producers output and sell to consumers, especially the industrial users by so doing, the government would be able to determine the so-called supply gap and give permission to only the producers of the product to import the quantity to meet the internal produce quantity.
“The maintenance of good price for producers will encourage more investors into the sector, and within a reasonable time, Nigeria would be self-sufficient in the production of CPO and even export to other nations that need it.”