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Firms Fret over Plot to Kill Cocoa Processing Industry

14 Jan 2013

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President of MAN, Kola Jamodu,
 

 
By Crusoe Osagie
 
Local Cocoa processing companies in Nigeria have raised the alarm over the plot by the European Union (EU) to effectively cripple the budding sector as a way of punishing the country for its refusal to sign the EU’s Economic Partnership Agreement (EPA). Nigeria had declined to sign the EPA due to the damaging effects the agreement portends for the nation's economy.

The Cocoa Processors Association of Nigeria (COPAN), which is the umbrella body of all cocoa processing companies in the country made the announcement in Lagos and called on the Federal Government to urgently come to their rescue and protect the nascent sector from dying.
COPAN accused the EU of trying to stifle the cocoa processing industry in Nigeria by imposing an additional six per cent tariff on processed cocoa products exported from Nigeria to Europe and America.

According to COPAN, the additional six per cent tariff increase, which only applied to Nigeria made processed cocoa products from the country more expensive than those coming from other cocoa producing countries in Africa Asia and Pacific countries against who this penalty is not applied.

Addressing newsmen in Lagos, Chairman of COPAN, Mr. Dimeji Owofemi, said the EU had further intensified pressure on the cocoa processors in Nigeria by removing all tariff on the exporting of raw cocoa beans from Nigeria to Europe and America, therefore making it more attractive for Nigerians to export raw cocoa instead of value-added processed cocoa, thereby killing companies that have invested billions to set up cocoa processing factories.

He warned that if the exporting of raw cocoa was not immediately banned by the Federal Government, then the imminent death of the processors who add value to the product cannot be avoided.

According to Owofemi, "value addition to raw cocoa is rapidly decreasing as it is being poorly rewarded and unprotected against the massive export of raw cocoa beans materials and the processed products are also heavily taxed by the same European countries that are charging no tax on raw cocoa beans - obviously to discourage value addition in Nigeria - giving their reason as the refusal of Nigeria to sign the EPA agreement.”

The EPA is a scheme to create a free trade area (FTA) between the European Union and the African, Caribbean and Pacific Group of States (ACP) as a response to continuing criticism that the non-reciprocal and discriminating preferential trade agreements offered by the EU are incompatible with WTO rules.

Owofemi disclosed that the cost of setting up a 10,000 metric tonnes capacity cocoa processing factory in the country was about N3billion and the remaining 10 processors who invested nearly N100 billion in the sector now face extinction because of the EU policy.

Only in November last year in a communique issued by the Manufacturers Association of Nigeria (MAN) after a brainstorming session held in Lagos on the European Union Economic Partnership Agreement with West African states, the association had cautioned the Federal Government to put on hold plans to put pen to paper on the agreement.

According to the President of MAN, Kola Jamodu, “given the low level of industrial development and the weak manufacturing base in the region, unrestricted access of imports from EU will certainly slow the pace of industrial development and therefore socio-economic development in Nigeria and ECOWAS.

"With its more advanced industries and technology, more competitive European Union imports will surely displace local production in Nigeria and ECOWAS thereby leading to plant closures and worsening of the employment situation and resultant deepened poverty.

"In fact, no ECOWAS country has a strong industrial sector at present that can withstand the tornado of global competition including challenges of EPA promoted by EU.”

Chairman of COPAN further urged the Federal Government to discourage export of raw cocoa beans in order to protect Nigerian value addition and job creation instead of enhancing the industrialisation of Europe and America, who are imposing tax of up to six per cent on our value-added products and zero duty on our raw cocoa and therefore helping them to keep their own citizens in gainful and sustainable industrial employment.

On his part, the publicity secretary of COPAN, Simon Conway-Jarrett said that as a foreigner, it has become more lucrative to export raw cocoa beans because of incentives from Nigerian and European countries’ governments as against processed cocoa and that if sustained it will lead to the failure and collapse of the Nigerian project.

Also lending his voice to the clarion call, the Chief Executive Officer of Cocoa Products (Ile-Oluji) Limited, Akin Olusuji, revealed that while processing factories employed a minimum of 250 people, raw beans exporters employed a maximum of 10 people with 10 made up of expatriates. He noted that every tonne of raw cocoa beans exported means exporting two jobs.

Owofemi further pointed out that the number of cocoa processing companies in the countries rose from three to the current 10 during the period of the past ban on cocoa raw beans export, he therefore urged the government in the interest of boosting industrialisation in the country to either ban or impose heavy tax on export of all raw commodities export.

Tags: Nigeria, Featured, Business, Kola Jamodu

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