By, Chika Emma Okeke.
Nigeria is currently the world’s 5th largest producer of palm oil with an estimated 1.015 million MT annual production, behind Indonesia, Malaysia, Thailand and Columbia who annually produce an estimated 43 million, 21 million, 3 million and 1.680,000 tonnes respectively.
However, with Nigeria’s annual consumption of palm oil put at an estimated 2.1 million, Nigeria currently is a big importer of palm oil in order to make up for the deficit in the country’s demand and supply estimates.
Nigerian Government in a laudable policy to protect local investors; oil palm plantation investors, local producers and processors of palm oil had placed a 35% tariff on palm oil imported into the country. This tariff plan in its original plan would have a two component of; 10% import duty as revenue to be paid to the government and the remaining 25% levy channelled into palm oil value chain development in Nigeria.
Sadly, in order to evade import duty and also taking advantage of the porous Nigerian land borders, importers of palm oil into Nigeria have increasingly decided to smuggle imported palm oil into the country using land borders, working in connivance with some corrupt Nigerian custom officials whose duties are to protect and secure the Nigerian land borders at key entry points into the country. The famous among them being the Seme border where Nigeria share boundary with Benin Republic, Idiroko in Ogun state and others where Nigeria share boundary with Niger Republic, Chad and Cameroon.
Imported products smuggling have been on a steady rise in Nigeria and has become a very high source of revenue running into billions of naira for unscrupulous customs and security official at different border posts in Nigeria. Sadly, there has not been a firm action by the Nigerian Government to combat and put an end to border smuggling of products into Nigeria, with the result over the years being the inability of locally made products in Nigeria to compete with these smuggled products whose market value are outrageously low.
One of the major sectors being destroyed and affected by illicit smuggling of palm oil into Nigeria is the palm oil industry.
First, for every palm oil smuggled into Nigeria, the palm oil industry in Nigeria is at a loss. This is so as revenue that would have been channelled to its development through the 25% levy on every imported palm oil which had been earmarked by the Federal Government to go into the development of the palm oil industry and its value chain in Nigeria is automatically lost and unaccounted for.
Industrial, mini, small and medium scale processors of palm oil in Nigeria are in the danger of being run out of business if Nigerian Government do not urgently put an end to palm oil products smuggling into Nigeria through the different land borders. Even industrial giants and sector leaders Okomu Oil Palm Plc and Presco Plc have increasingly seen their revenue and profit dwindle due to the proliferation of low quality and low priced smuggled palm oil in Nigeria’s market.
Presco Plc, Nigeria’s biggest palm oil producers in 2018 reported a decline in revenue of about N16.2 billion for the period ended 30th September, 2018, from N16.9 billion over same period in 2017. Also Okomu Oil Palm Plc, Nigeria second largest producer saw their revenue dip by almost 9% to N3.9 billion in 2018, largely driven by unfavourable crude palm oil prices in 2018.
More so, the effect of these smuggled palm oil in Nigeria is more devastating on mini processors, especially individual women in rural communities whose livelihood over the years have depended on the proceeds from processed palm oil. For a large number of these rural women, they have been deprived of their livelihoods and thrown back into a deeper level of poverty as they lack the finances to withstand and wait out a long period to see any meaningful increase in the price of palm oil above their processed cost value.
The colossal damage it has also done to the development of the palm oil industry and its value chain in Nigeria cannot be over emphasised. Increasingly local and foreign investors have continued to look away from exploring investments in oil palm plantations development and establishment of modern and technologically advanced palm oil mills across the country which have the potential of proving jobs for a large number of our unemployed youths.
Furthermore, for Nigerian consumers, the impact of palm oil smuggling is even more catastrophic. This is as a result of the fact that most palm oil smuggled into Nigeria have been found to be of poor and substandard quality. Most of these smuggled palm oil products have been found to have long exceeded its shelf life and are therefore no longer safe for human consumption. However, by smuggling them into Nigeria through land borders, importers evade any relevant quality inspection procedures and testing that should have been carried out on them at the ports before they are allowed into the Nigerian market. The Federal Government therefore urgently needs to intervene to protect the health and lives of Nigerians from smuggled palm oil products.
Untill 1960, Nigeria was the world’s leading producer of palm oil, accounting for nearly 45% of global palm oil production. If Nigeria can regain its lost glory and position in palm oil production, then the Nigerian Government must take an honest, firm and courageous step to put an end to palm oil smuggling into the country.
If the new efforts and commitment being made by the Federal Government of Nigeria as recently announced by the Central Bank Governor, Mr. Godwin Emefiele to revive palm oil production in the country and attract investors into the palm oil industry would bear any meaningful result, then palm oil smuggling into Nigeria must be a thing of the past.
Most importantly, with Nigeria’s population projected to reach an estimated 450 million in 2050, making Nigeria the third world’s largest population, Nigeria must be prepared to become at least self-sufficient in food production among which palm oil is a key food produce with the highest daily consumption rate in Nigeria.
Chika Okeke is the CEO of Agro News Nigeria, & Co-Founder & Executive Director of Feed Africa Initiative; A UK based NGO, advocating for a new stakeholders’ approach to achieving food security in Africa.