Cocoa Sector Fraught With Poor Output Despite NEXIM’s $71m Support Funds

The Nigerian Cocoa industry is yet to perform near capacity despite efforts of the federal government to revive it and make it react to its full potentials, a situation the managing director/CEO of Nigerian Export Import Bank (NEXIM) Abba Bello said is worrisome.

Whereas Nigeria contributes 73 per cent global cocoa production worth N200 billion, it receives only five percent of global wealth from cocoa. The country’s cocoa production is estimated at between 280,000-340,000 metric tonnes.

Industry experts say Nigeria’s inability to ensure value addition to locally produced cocoa products is responsible for the huge loss in revenue to a country like Cote d’Ivoire with maximum processing facilities for export.

To help the sector attain its full potential, Bello said NEXIM Bank has supported the setting up of 15 companies with over $71 million for processing of cocoa, while about 200 exporters were supported on cocoa trading, with finance and risk bearing facilities for higher value addition. All of that has failed to yield the desired result.

He made the disclosure yesterday at the international and cocoa forum with the theme: ‘Putting Value in Cocoa Producing Regions’ in Abuja during a paper presentation “Expand Thinking Beyond Cocoa Beans and the Opportunities for Investment and Job Creation.”

“Out of the 20 cocoa processing factories in Nigeria, only eight are in some form of operation due to a myriad of challenges,” he stated.

He identified the challenges facing the cocoa sector to include production/enabling infrastructure, logistics, demand and supply constraints, and finance.

Experts at the forum also said the sector is challenged by aged plantation, poor yielding varieties, low productivity, high cost of energy estimated at about 45 per cent of production cost for processors, port congestion and lack of adequate packaging materials.

The industry is also faced by the problems of slow growth in products output vis-a-vise installed processing capacity, lack of access to finance at the lower end of the value chain, inadequacy and poor structure of finance

Like the NEXIM MD, other speakers at the forum said the cocoa sector has a litany of prospects it’s able to achieve value addition. Those who spoke said with value addition, the sector would help Nigeria mitigate the problem of low processing capacity utilisation, enhance domestic consumption, promote technology transfer and adoption to create a skilled labour force, enhance FX receipts with higher value added exports and bridge infrastructure gap among others.

Côte d’Ivoire, which is Africa’s leader in cocoa processing achieved that feat through government’s deliberate interventions, provision of tax incentives for processors and introduction of a cocoa beans export tax. “This has attracted a spate of investments by major value chain players and cocoa processing companies across the globe,” Bello said.