We commend government’s renewed effort to revive the palm oil sector. The initiative, which is driven by the Central Bank of Nigeria (CBN), is part of the vision of the present administration to diversify the economy through agriculture. But this effort to make the sector contribute significantly to the economy may be threatened by inadequate local production and continued importation of palm oil. 

Therefore, the recent report that over $500 million of Nigeria’s foreign exchange is spent on the importation of palm oil to meet the demand gap of about 1.25 metric tonnes is not encouraging. This can explain why the governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has urged state governors to intervene and encourage the growth of the palm oil industry by easing access to land.

We support the new move to stop the importation of palm oil. The money spent currently on importation of palm oil is enough to enhance the development of the palm oil sector if judiciously deployed. Though the economy has recorded marginal investment in the palm oil value chain in recent times, it falls short of expectations. To diversify the economy through the revival of the palm oil industry, the governors of the South-South and South-East will make conscious plans to revive the sector.

At the launch of the Edo State Oil Palm Programme (ESOPP) and the Plantation Owners Forum of Nigeria Oil Palm Discourse-Focus, in Benin City, some days ago, Emefiele stated that the CBN would provide N69 billion funding facility required for the ESOPP. Currently, Nigeria’s total domestic palm oil demand and consumption is 2.5 million metric tonnes, while local production capacity is only 1.25 million metric tonnes.

Statistics show that if the huge amount spent on forex for palm oil imports is stopped and invested in local palm trees and oil production, Nigeria is likely to earn over $10billion worth of foreign exchange at the present global market price of $600 per tonne and an estimated production level of 16 million tonnes.

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Therefore, government’s effort to revive the palm oil industry should be encouraged. Interestingly, the South East and South South governments have promised to provide at least 100,000 hectares of arable land for this initiative, which is designed to accommodate the smallholder farmers.

About three million hectares of arable land is required for the development of large-scale palm oil plantations across the country. Under its Oil Palm Development and Expansion Initiative, the CBN has so far disbursed over N1billion to the oil palm sector. The apex bank is also monitoring the utilisation of the fund to ensure efficiency and maximum output. Also, big-time palm oil producers and associations are encouraged to adopt what the CBN calls the “Out-Grower Scheme” to maximise opportunities in the sector.

It is commendable that the CBN will promote and support individual smallholder farmers in the palm oil revival effort as well as collaborate with relevant stakeholders to provide long-term loans at single digit interest rates. Government must ensure that the new plan to revive the palm oil sector succeeds. It is ironical that countries such as Malaysia, Thailand, Indonesia and Columbia that imported palm oil seedlings from Nigeria in the late 1950s and 1960s are now leading producers and exporters of the produce, while Nigeria is at a distant fifth position, with just three per cent of the global supply of palm oil, with estimated production of 800,000 metric tonnes, while Malaysia and Indonesia produce 25 million and 41 million tonnes of palm oil, respectively.

Currently, Nigeria is a net importer of palm oil, importing between 400,000 and 600,000 metric tonnes annually to meet local demand for the commodity despite the availability of over three million hectares of farmland for palm oil cultivation. We urge the state governments in the South East and South-South geo-political zones to drive their economies by prioritising the palm oil sector. We believe that reviving the palm oil industry will create jobs and boost their internally generated revenue.