Emefiele Seeks Govs’ Intervention to Save $500m from Palm Oil Imports

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CBN Governor, Mr. Godwin Emefiele

•CBN commits N69bn to Edo oil palm sector

Adibe Emenyonu in Benin City

The Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, yesterday called on state governors to help the country stop the $500 million of scarce foreign exchange being expended on the importation of palm oil to meet identified demand gap of 1.25 million metric tonnes.

Emefiele, at the launch of Edo Oil Palm Programme and the Plantation Owners Forum of Nigeria Oil Palm Discourse-Focus in Benin City, urged the governors to ease access to land to boost oil palm cultivation and close the demand gap.

He put the country’s total domestic palm oil demand and consumption at 2.5 million while local production capacity is only 1.25 million metric tonnes.
He said Edo State with Nigeria’s largest oil palm plantation, is the best place to invest, if the country must revive its oil palm industry.

Emefiele, who commended the commitment of the state Governor, Mr. Godwin Obaseki, to developing the country’s oil palm sector, said the CBN would provide N69 billion funding facility required for the ESOPP.

He added that the intervention was CBN’s commitment to oil palm sector in the state.
He stated that the primary objective of the gathering was to exchange ideas and garner support to revive the oil palm industry and its entire value chain through financing major, micro small and medium entrepreneurs and smallholders in the country.

He said: “I am indeed excited that we have arrived at this juncture as in pursuance of the avowed objective of the administration of President Muhammadu Buhari to enhance economic diversification through agriculture. We will pave the way for greater and more endearing developments in respect of the development of the Nigerian oil-palm sector.

“This event today is germane in view of the realities and challenges of today’s economic environment, considering the need to diversify our monolithic economy from crude oil to productive sectors such as agriculture, which contributes over 20 per cent to GDP and 36 per cent to employment.”

According to him, the strategic potential of the agricultural sector and its value chain in an economy, if well harnessed, could boost rural employment generation, ensuring food security and foreign exchange conservation through reduced imports.

The apex bank governor noted that of particular interest to all the stakeholders should be how to improve the country’s oil palm industry, adding that oil palm is an important tree crop with immense economic importance as its products are important source of affordable edible and non-edible oils for domestic and industrial uses.
However, despite its potentials, Emefiele expressed concerns about the challenges facing the Nigerian palm oil industry.

He said the palm oil industry’s further growth and contribution to the national economy were being threatened by inadequate local production and continued reliance on imports.
Giving some backgrounds on the recent developments in the oil palm sector in Nigeria, he explained that the journey to revive the oil palm sector began with the discovery that over $500 million of the country’s scarce foreign exchange was being expended on the importation of palm oil to meet identified the demand gap of 1.25 million metric tonnes.

“Faced with this stark reality, the CBN decided to intervene with a view to changing the narrative and in line with the ambitious attempt to reposition agriculture as the mainstay of the Nigerian economy. Furthermore, in our bid to restore the country’s pre-eminent status as the third global net exporter of palm oil, the Central Bank of Nigeria on 23rd June 2015 included palm oil and palm oil products alongside other commodities on the exclusion list of items not valid for foreign exchange at the Nigerian Foreign Exchange window.

“The dwindling fortune of the industry has been attributed to myriads of factors that accumulated over the years, which were mainly attributed to the neglect of the agricultural sector in the wake of the oil boom, which has been exacerbated by the inherent structural deficiencies and potential risks associated with agribusiness in Nigeria. It is hard to believe that the country’s global market share in palm oil production fell from about 43 per cent in the 1960’s to just about two per cent currently,” the CBN governor said.

Emefiele stated that the CBN has noted the efforts of state governments in the palm oil producing zones who pledged to make available 100,000 hectares of land in their renewed commitment to revive the production of the commodity, adding that of special note is the active participation of corporate entities, both local and multinationals who were matched to confirmed available lands from state governments and who, as part of their backward integration initiatives, are increasingly investing in palm oil and its value chain, especially at production levels.

Besides, he said the CBN, under its Oil Palm Development and Expansion Initiative, had so far disbursed over N30 billion to the oil palm sector and was monitoring the fund utilisation to ensure efficiency, effectiveness and maximum output.
“Oil majors and apex associations are being encouraged to adopt the Out-Grower Scheme to maximise inherent opportunities.

“However, to sustain rural employment and ensure community participation and inclusiveness, the bank is determined to promote and support individual small holder farmers in the palm oil revival plan. It was in the light of the above, that the Central Bank of Nigeria is out to collaborate with the relevant stakeholders to find sustainable solution to the financing needs of these small holders farmers, among others,” he added.

He told the gathering that the CBN, as a major stakeholder in the financial sector and indeed the economic development of the country, was set to render its unflinching support to the development of oil-palm by providing affordable long-term financing to out-growers.

“It is expected that other stakeholders will borrow a leaf from this commitment and play their respective roles to enable us to achieve our common goal and objective,” Emefiele said.
On his part, Obaseki said the project was in line with his administration’s agenda to harness the state’s rich human and natural endowments to achieve economic growth and wellbeing of Edo people.

According to him, his government is committed to diversify the state’s economy, achieving economic prosperity, creating jobs and improving the lives of the people.
“The focus on the oil palm sector alone can stimulate and drive the economy of any state as it has done to Malaysia and Indonesia. This programme will enable us to move from complaining and talking about what we have lost to concrete action towards regaining what has been lost,” he said.

He added the ESOPP would leverage on what the CBN has initiated, saying: “Ours is to remove the critical risk in the oil palm sector by solving the biggest hindrances to plantation farm in Nigeria and making land available to farmers.”
He said his administration had provided about 120,000 hectares of land for oil palm development in the state.

“Successful implementation of the programme will create over 600,000 more jobs as well as 25,000 hectares of forest cover. This programme will cost us about $600 million, which is approximately N200 billion. The money is there globally as money is not out of reach with investors on ground,” he stated.

The governor said he was setting up the Edo State Oil Palm Programme implementation office, noting that consultants, surveyors, community relations experts will be trained to review and ensure guidelines are strictly followed.

“I thank the CBN governor for stimulating the agricultural sector, creating the platform for our dream to come true. As a state, our goal is to be that trigger state for oil palm in Nigeria as the nation needs millions of lands for oil palm. We will stand as a stimulant for other states,” Obaseki added.

He described oil palm as synonymous with APC logo, which is derived from the palm, adding that the whole gamut about Plantation Owners Forum of Nigeria Oil Palm Discourse-Focus on CBN Smallholder Oil Palm Intervention was to develop the economy of the state like that of Malaysia.

Obaseki stated that the principal goal of the forum was to leverage what the CBN had initiated by removing all the risks involved in the cultivation and production of palm oil.