ABUJA – The Central Bank of Nigeria (CBN) appears. determined to restore the lost glory of the palm oil sector in Nigeria. The bank on Monday held a meeting with stakeholders in the sector including three state governors – Governor Okezie Ikpeazu of Abia, Udom Emmanuel of Akwa Ibom State and Godwin Obaseki of Edo States. The three states form the core of Nigeria’s palm oil belt.
The CBN believes that resuscitating Nigeria’s Palm Oil sector is vital to the country’s growth objectives as a nation, and to its efforts at creating jobs for Nigerians.
“This meeting is indeed an important one as it brings together key players across the palm oil value chain, state governments, banks, and officials of the CBN, in order to examine the challenges faced by palm oil operators.
“We also hope to identify promising approaches that will help in revitalising this key sector and also enable Nigeria to regain its position as one of the leading global producers of palm oil, said Godwin Emefiele, governor of CBN while addressing the stakeholders in Abuja.
Emefiele recalled that in the late 50’s and 60’s, Nigeria was not only the world’s leading producer of palm oil, it was also the largest exporter of palm oil, with close to 40 percent of the global market share.
“Today we are a distant 5th among leading producers of palm oil; we barely produce up to 3% of the global supply of palm oil, with estimated production of 800,000 MT of palm oil, while countries like Malaysia and Indonesia produce 25 million and 41 million tonnes of palm oil, respectively.
“We have also become a net importer of palm oil, importing between 400,000 – 600,000 MT of palm oil in order to meet local demand for this commodity,” he said.
This is despite the availability of over 3million hectares of farmland for palm oil cultivation, production remains low at close to 2 tonnes per hectare, relative to a global benchmark of 25 tonnes per hectare. This is as a result of the maturation of existing palm trees, as some of these trees were planted in the 50’s, as well as low investment in replanting high yielding palm oil seeds. The usual life cycle for optimum palm production is 25 years.
According to the CBN governor, “If we had kept pace with our peers in supporting improved cultivation of palm oil, at the current global market price of $600 per tonne, and an assumed production level of 16m tonnes, Nigeria could have generated close to $10bn worth of foreign exchange for the country. This analysis does not take into consideration the amount of jobs that could have been created in our rural communities from large scale small holder developments.”
He said: “This conversation is indeed important as it forms part of our overall strategy to reduce our reliance on crude oil imports, diversify the productive base of our economy, create jobs and conserve our foreign exchange.
“Despite placing oil palm in the forex exclusion list, official figures indicate that importation of palm oil had declined by about 40 per cent from the peak of 506,000 MTs in 2014 to 302,000 MT in 2017.
“This indicates that Nigeria still expends close to $500 million on oil palm importation annually and we are determined to change this narrative. We intend to support improved production of palm oil to meet not only the domestic needs of the market, but to also increase our exports in order to improve our forex earnings,” he said.