Palm Oil Sector Neglect: Nigeria Losing Over $10 Billion Foreign Exchange Earnings, Says CBN

By CLEMENT NWOJI, Abuja

The Central Bank of Nigeria (CBN) has disclosed that the nation is losing estimated $10 Billion foreign exchange earnings due to neglect of investing in Palm oil cultivation and production.

The CBN Governor, Godwin Emefiele, who reeled out statistics to buttress the loss, spoke at a Stakeholders Meeting on the Palm Oil Value Chain, meant to generate solutions to stimulate investments in Palm oil sector.

He cited that: “at the current global market price of $600 per tonne, and an assumed production level of 16m tonnes, Nigeria could have generated close to $10bn worth of foreign exchange for the country.”

He regretted that despite placing oil palm in the forex exclusion list, official figures indicate that importation of palm oil had declined by about 40 per cent from the peak of 506,000 MTs in 2014 to 302,000 MT in 2017.

He said: “This indicates that Nigeria still expends close to $500 million on oil palm importation annually and we are determined to change this narrative. We intend to support improved production of palm oil to meet not only the domestic needs of the market, but to also increase our exports in order to improve our forex earnings.”

The CBN Governor recalled that: “In the late 50s and 60s, Nigeria was not only the worlds leading producer of palm oil, it was also the largest exporter of palm oil, with close to 40% of the global market share.

“Today we are a distant 5th among leading producers of palm oil; we barely produce up to 3% of the global supply of palm oil, with estimated production of 800,000 MT of palm oil, while countries like Malaysia and Indonesia produce 25million and 41 million tonnes of palm oil respectively.

“We have also become a net importer of palm oil, importing between 400,000 600,000 MT of palm oil in order to meet local demand for this commodity. Despite the availability of over 3m hectares of farmland for palm oil cultivation, production remains low at close to 2 tonnes per hectare, relative to a global benchmark of 25 tonnes per hectare.

“This is as a result of the maturation of existing palm trees, as some of these trees were planted in the 50s, as well as low investment in replanting high yielding palm oil seeds. As some of you may know, the usual life cycle for optimum palm production is 25 years.”

However, Emefiele expressed hope to identify promising approaches that will help in revitalizing this key sector and also enable Nigeria to regain its position as one of the leading global producers of palm oil.

He emphasized the importance of the meeting to revive the Palm oil sector as it forms part of overall strategy to reduce the nation’s reliance on crude oil imports, diversify the productive base of the economy, create jobs and conserve the country’s foreign exchange.

With regards to improving access to finance for small holder farmers focused on cultivation of palm oil, he CBN Governor disclosed that the Bankers Committee had established a special sub-committee to make recommendations on sustainable financing models for oil palm and four other critical agricultural commodities that include cocoa, sesame seed, shea-butter, animal husbandry and cashew.

“We expect to develop a funding model that will take into consideration the 3- 4-year gestation period required in cultivating palm oil”, he assured.