10 September 2013

Nigeria: Infighting Responsible for Ailing Cocoa Processing Industry, COPAN Insists

The Cocoa Processors Association of Nigeria (COPAN) has blamed a seeming cold war between the Federal Ministries of Agriculture and Trade and Investment, for the crisis, which is threatening to wipe out the nation's cocoa processing industry.

Although COPAN did not provide details of the tussle between the two ministries, they stressed that operators of the cocoa processing sector in the country had turned out to be the ultimate victims in the needless supremacy battle within the same government.

COPAN also raised the alarm over what they described as a direct or indirect ban on credit flow to the industry from the nation's financial institutions.

"The finance industry, particularly the commercial banks, seem to have imposed a direct or indirect ban on financing cocoa processors. We are no longer allowed to take credit and this has plunged us in a very serious crisis," the group said.

Managing Director of FTN Cocoa processing company, Mr. Akin Laoye, stressed that the sector has been having a hard time with the banks.

"It is painful. We cannot secure bank guarantees from banks and most of our factories are on their knees. A 10,000 tonnes-capacity cocoa factory, for example, requires N3 billion and we can't handle this without the banks. Unfortunately the banks appear only willing to finance trading activities and this is not taking us anywhere."

Some industrialists have said that it is important for the federal government to come up with incentives aimed at improving the agricultural processing sector in Nigeria.

Specifically, the operators, under the aegis of Cocoa Processors Association of Nigeria, said there was the need for government to stop paying lip-service to issues concerning the agricultural processing industry.

They noted that the cocoa industry, for instance, was not getting the necessary attention from the federal government, adding that this had caused untold hardship to operators in the industry.

Former COPAN Chairman, Mr. Akin Olusuyi, noted that the Export Expansion Grant (EEG), which is the principal incentive from the federal government to cocoa processors, must be revisited and made to work as was originally intended. "EEG as is being implemented cannot fulfil the purpose for which it was created. It is supposed to promote export and exporting industries. No agriculture-based company can survive if people are incentivised to export the raw materials the company needs to produce.

"If you encourage people to export raw materials from Nigeria to more technologically advanced and infrastructurally-developed countries that do not want Nigeria to rise to the point where they add value to their raw produce, then it is double jeopardy," Olusuyi added.

He said at the moment, there appeared to be an order to the Nigerian Customs Service not to honour the Negotiable Duty Credit Certificates (NDCC), which had been issued to COPAN members for the past one year, stressing that even though the instrument is discounted by up to 40 per cent, it still cannot be liquidated.

Also speaking, the Chairman, COPAN, Mr. Dimeji Owofemi, noted that the cocoa industry was not performing optimally. He added that if care was not taken, the industry would suffer like the oil sector, where crude was exported in its raw form, refined abroad and later sold to the country at very expensive rates.

Owofemi said incentives in form of EEG to all exporters of raw agricultural commodities like cocoa beans without processing to value-added products should be avoided.

"We hope that government will listen to our pleas this time and that our expectations would receive much need attention in order to fast-track the transformation of the cocoa subsector as a major diversification and employment advancement of the Nigerian economy towards the desired growth-led path," he said.

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