ETLS damaging gains in Nigeria’s CPO sub-sector

The Federal Government of Nigeria on June, this year in another publication confirmed the illegal flooding of the Nigerian market with large volumes of Crude Palm Oil (CPO) imported from neighboring West African nations, under the guise of the ECOWAS Trade Liberalisation Scheme (ETLS).

According to the report, most of the palm oil imported from Malaysia, Indonesia and others actually end up in the Nigerian market duty-free; thereby displacing locally produced palm oil from the market and suffocating the Nigerian oil palm plantations

The article continued to report that the aggregate of locally produced and imported palm oil in these neighboring West African nations by far surpasses what they require both for their domestic and industrial consumption, therefore making the massive Nigerian market the dumping ground for these cheap CPO, which also comes into Nigeria duty-free under ETLS; making it by far cheaper than the CPO produced within Nigeria.

“Nigeria”, it said, “should be producing and exporting into those countries. We should not be using those countries as transit areas. Regional trade does not mean that we should import. Neighboring West African countries import crude palm oil far higher than their needs. For Benin Republic, between the period 2003 to 2013, their production was stagnant, but their export increased by 1,018 per cent. Their import increased by 1,084 per cent of crude palm oil.”

Text Box: Production Dynamics West Africa

Text Box: • West Africa: Average: 90% Small holders • Nigeria: > 80% small holders though large chunks cannot be used in the FMCG industry Reasons for slow progress Low private participation due to Government’s lack of interest Outdated technology Outdated production knowledge

It is a known fact today that in every part of the world where agriculture is growing, it is because their governments are supporting them in various ways including the implementation of favorable agribusiness policies and practices.

In Nigeria for example, in the last one year, the government distributed 1.4 million sprouted nuts to farmers free. These hybrids sprouted nuts are high-yielding Tenera seedlings of greater yielding capacities that will benefit and improve production.

Howbeit, this requires that the farmers have to recapitalise their plantations which, is the responsibility of the government.

As we today look at the Nigerian Stock Exchange, we are getting excited because two of the best performing stocks are from the Oil Palm Industry sector and we should encourage these companies to stay in that profile. There is no doubt that Nigeria can become self-sufficient in palm oil production and consumption although we currently pay a higher price due to the weakened strength of the Naira each time we import CPO or any other agricultural produce.

It is therefore important that if government is to encourage and promote private sector participation in its current transformation efforts in palm oil plantation development, the current lapses in the ETLS where round tripping of CPO from other countries are dumped into the nearby country and subsequently the same is transported into Nigeria under the guise of the ETLS must be checked and eradicated.

In as much as the objective of the ETLS is to promote industrialisation within the sub-region, the current practices are totally counterproductive to this objective and there is a need to have a review of the ETLS in its journey so far. Government should not ignore the cry of the industry especially with the continual falling value of the Naira against Dollar and the dire need to create jobs for our jobless teaming youths.

Also rather than our continual focus on the Dollar, Nigeria should make physical policies that give strength to the Naira rather than the dollar. Ethiopia over the years gave strength to its currency and have survived to maintain a steady exchange rate despite the many socio economic challenges on that country. A prompt attention of government to providing succour to those investors in the development of Agricultural produce such as Palm oil should be seen as the right step in the right direction.