CBN: Nigeria spends $500m yearly on palm oil import, rolls out rescue mechanism.

 
 
Nigeria currently expends over $500 million yearly to import oil palm, the Central Bank of Nigeria (CBN) has said. Consequently, the CBN Governor, Mr. Godwin Emefiele, yesterday rolled out a rescue plan for oil palm production, which is coming precisely three weeks after he unveiled a revival plan for textile and cotton industries. To change the narrative and return Nigeria to her hitherto position in 50s and 60s as world’s leading producer of palm oil, Emefiele held strategic meeting with the governors in palm oil production belt zone.
The meeting had in attendance other key players across the palm oil value chain. Governors Udom Emmanuel (Akwa Ibom), Godwin Obaseki (Edo) and Okezie Ikpeazu (Abia) were in attendance. Lamenting the back position Nigeria now assumes in production of palm oil, a commodity she once dictated its pace, Emefiele regretted Nigeria is now a net importer of palm oil, importing between 400,000 and 600,000 MT of the commodity in order to meet local demand for a produce it had once commanded its control. “As some of you may recall, in the late 50s and 60s, 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 per cent of the global market share,” the CBN governor said.
“Today we are a distant fifth among leading producers of palm oil; we barely produce up to three per cent 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.”
Emefiele said despite the availability of over three million hectares of farmland for palm oil cultivation, production remains low at close to two 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 50s, as well as low investment in replanting high yielding palm oil seeds. “As some of you may know, the usual life cycle for optimum palm production is 25 years. 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 16 million tonnes, Nigeria could have generated close to $10 billion worth of foreign exchange from palm oil.
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 explained On why he chose to bring governors from the oil palm producing states to the meeting,
Emefiele said the bank was keen on securing their buy-in to set a partnership model that would, with immediate effect, stimulate investments in the palm oil plantations, such that within the next three to five years, the global share of the country’s oil palm production would be more than double. “Our ultimate vision is to overtake Thailand and Columbia to become the third largest producer over the next few years,” he added. Emefiele listed the designed intervention package to resuscitate palm oil production to include using part of CBN’s Anchor Borrower Programme (ABP), granting loan at nine per cent and working with off takers.
“On our part, the ABP and our Commercial Agriculture Credit Scheme (CACS), CBN will work with large corporate stakeholders and small holder farmers to ensure availability of quality seeds for this year’s planting season and agro-chemicals in order to enable improved cultivation of palm oil,” he said.
“We will also work to encourage viable off taker agreements between farmers and large-scale palm producing companies. Loans will be granted through our ABP and CACS programmes at no more than nine per cent per annum to identify core borrowers. Some of the targeted large scale farmers are in our midst today and we shall use the opportunity of this engagement to achieve concrete results,” the CBN governor said. Responding, Governor Obaseki said Edo State was currently cultivating about 70,000 hectares of land for oil palm.
He spoke on the need to revive the moribund Institute for Oil Palm Research to improve investment in research and production of quality oil palm seeds. Also, Governor Emmanuel spoke on the need to educate small holder farmers of oil palm on the use of improved seedlings as a way to improve output. Meanwhile, five months after it announced new minimum capital requirements for micro-finance banks (MFBs) in the country, CBN yesterday said it had revised the requirements as well as the categories of the micro-lenders to include Tier 1 and Tier 2 Unit MFBs.
The banking watchdog stated this in a circular posted on its website, which was signed by its Director, Financial Policy and Regulation Department, Mr. Kevin Amugo. The regulator said the review was part of efforts to ensure: “Continued operations of microfinance banks in the rural, unbanked and under-banked areas of the economy.” According to CBN, “Unit Microfinance Banks shall comprise two Tiers: Tier 1 Unit Microfinance Bank, which shall operate in the urban and high-density banked areas of the society; and Tier 2 Unit Microfinance Bank, which shall operate only in the rural, unbanked or under-banked areas.”
As part of its review of MFBs’ categories, CBN announced that Tier 1 and Tier 2 Unit MFBs will have minimum capital requirement of N200 million and N50 million respectively, while minimum capital requirements of State and National MFBs remain at N1 billion and N5 billion respectively. It also directed that Tier 1 Unit MFBs must meet a N100 million capital thresholds by April 2020 and N200 million by April 2021, while Tier 2 Unit MFBs must meet a N35 million capital thresholds by April 2020 and N50 million by April 2021. Similarly, the apex bank stated that state MFBs shall increase their capital to N500 million by April 2020 and N1 billion by April 2021, while National MFBs shall hold a capital of N3.5 billion by April 2020 and N5 billion by April 2021.