The Central Bank of Nigeria (CBN) has vowed to help push Nigeria to the world’s third largest producer of palm oil.
If successful, Nigeria will overtake Thailand and Columbia as a major palm oil producer in the world.
Addressing stakeholders in the palm oil industry in Abuja Monday, the Governor of the CBN Mr. Godwin Emefiele stated that “our ultimate vision is to overtake Thailand and Columbia to become the 3rd largest producer over the next few years.”
The CBN Governor noted that “if we had kept pace with our peers in supporting improved cultivation of palm oil, 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. This analysis does not take into consideration the amount of jobs that could have been created in our rural communities from large scale small holder developments.”
To achieve this, the CBN Governor is advocating for improved financing.
According to him, “with regards to improving access to finance for small holder farmers focused on cultivation of palm oil, 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, shear-butter, animal husbandry and cashew.”
He added that as part of the Anchor Borrowers Program (ABP) and our Commercial Agriculture Credit Scheme (CACS), “the CBN will work with large corporate stakeholders and small holder farmers to ensure availability of quality seeds for this year’s planting season and agro-chemicals in order to enable improved cultivation of palm oil. We will also work to encourage viable off taker agreements between farmers and large-scale palm producing companies.”
Thereafter he disclosed that “loans will be granted through our ABP and CACS programs at no more than 9% p.a to identified core borrowers.”
Emefiele noted that “with an estimated 3 million hectares of land under cultivation, abundance of suitable arable land, we need the cooperation of our state Governments in the oil palm producing zones to make land available to investors with proven financial and technical capabilities, who will be able to support developments of large scale palm oil plantations in the country.”
He then announced that all the states in the South-South and South-East regions have agreed to provide at least 100,000 hectares each for the initiative. This program is also expected to accommodate the small holder farmers.
Monday’s meeting was enlarged to include Executive Governors and other top government functionaries from the oil palm producing states to elicit their buy-in and set a partnership model that would, with immediate effect, stimulate investments in the palm oil plantations, such that within the next 3-5 years, the global share of the country’s oil palm production would more than double.
Emefiele lamented 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. 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” he said.
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.
Also speaking at the event, the Edo state Governor Mr. Godwin Obaseki cautioned that stakeholders to the oil palm initiative should “develop very clear plan of achieving the set objectives.”
He also spoke on the need to revive the moribund oil palm research Institute and more investment in research and production of quality oil palm seeds.
According to him, “we should understand that for meaningful investment to come into the oil palm industry, we have to think of other incentives, to encourage manufacturers to turn oil palm to other things.
“What I mean is that palm oil can be used to manufacture margarine, soap, toothpaste and other things that require oil palm.
“So we must also think about how to create incentives for those who are currently in the business to exploit all the uses of palm oil to create job opportunities for our people,” he said.