Why Nigeria needs to ban importation of cassava raw materials

Nigeria is the largest producer of cassava in the world, with annual production at over 50 million tons. This figure according to stakeholders is very low because currently, our production per hectare is still below 10 tons, which is significantly low.

However, being the largest producer of cassava in the world, Nigeria does not have adequate factories and industries to process and convert these cassavas to industrial raw materials, hence it is popularly consumed locally as fufu or gari.

Imported cassava raw materials had continued to lead in the market based on price, while locally processed ethanol and starch are sold higher due to high cost of production, imported ones maintain very low cost even after import duty is paid.

The government, on the other hand, had received the report on the import adjustment tax during the Economic Recovery Growth Plan (ERGP) meeting held last year and agreed to work in it.

Nigeria requires a total of 400 million litres of ethanol annually, but local production is still below 15 million litres annually, hence the remaining 385 million litres is imported to satisfy local demand.

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According to Ashish Deshpande, one of the managers at Allied-Atlantic Distilleries Limited (AADL) which is the largest ethanol producers in Nigeria, a litre of ethanol in the market is sold for N300. It means that Nigeria is spending N115 billion annually to import 385 million litres of ethanol.

Deshpande explained “we have a big market for ethanol in country, but however the challenge is that we need to start the production on local basis, we need to have more and more producers of ethanol locally, the gap between the local production and the importation is very high, that gap needs to be bridged.

“The production of ethanol is low because we do not have enough producers of ethanol in the country to start with, there are a number of issues one of the issues is the tariff on imported ethanol, if you look into this matter, am sure sustained investment into this industry can help us.

“The government need to increase the tariffs on imported ethanol, that will help the local industries to get a higher percentage of the production.

“We produce 9 million litres of ethanol annually, we need to increase the local industry to move into this sector from the help of government so that we can bridge this gap as fast as possible”.

Meanwhile, it was gathered that other local producers of ethanol across the country produce about 6 million litres annually which brings the annual ethanol production in Nigeria to about 15 million.

On starch production, According to the Chairman, Harvest Feeds Agro-Processing, Goke Adeyemi, Nigeria requires about 600,000 tons of starch annually, while our annual production is about 100,000 tons, leaving a deficit of 500,000 which is imported.

Adeyemi further explained that a ton of starch is sold for N200,000 in the market, which means that Nigeria is spending about N100 billion annually importing 500,000 tons of starch.

Speaking further on starch importation, Adeyemi said “It is an issue that is very topical and it came up in the Economic Recovery Growth Plan (ERGP) Focus Lab that President Muhammadu Buhari initiated in 2018.

“Even though Nigeria is the largest producer in cassava, but so far, starch production is still at infancy in Nigeria, the issues are such that right now the imported starch in Nigeria is attracting very low import duty, it’s about 5 to 10 per cent, as a result, they sell imported starch in Nigeria at about N140,000 to N150,000 per ton, however, the starch producers in Nigeria cannot sell at that price because our processing cost is quite high, and the yield of cassava is still very low.

“Cassava starch producers are largely rural companies basically and infrastructure in rural are very poor, the government is making some efforts and we can see it, however, we want it accelerated so that Nigeria can take rightful place as the biggest processors of cassava, that is our aim”.

Adeyemi while commending the Central Bank of Nigeria over the forex restriction on the importation of cassava raw materials, said at the long run, a total ban should be placed on starch importation.

According to him “is a very welcome development, I want to say kudos to the present administration for making that decision. However, this only step one, right now import restriction means that some to some extent, our own forex won’t be ceded to import starch in Nigeria, but if someone else has dollars outside Nigeria he can bring in starch

“What the economy desire is a total ban on the importation, so that’s why I said it’s the first step because in the instance we are now, Nigeria is an import-dependent economy for now, and a lot of effort and action is needed by informed people so that rather than imported dependent, we become an export-oriented economy”