Palm Oil Importation Surges Despite FX Restriction

• Palm Oil Importation Surges Despite FX Restriction

Data from the Nigerian Ports Authority (NPA) has revealed that Nigeria imported more palm oil in recent months despite the Central Bank of Nigeria (CBN)’s forex restriction on importers of the product.

The data shows 340,068 metric tonnes worth N256.7 billion or $713.12 million of crude palm oil were imported into the country between January 2012 and September 2019 — mainly from Malaysia.

The report also shows 82,210 tonnes were imported between June and August 2019.

While another 16,000 tonnes of palm oil reportedly arrived at the Apapa Bulk Terminal Limited (ABTL) during the weekend.

In March, the Central Bank of Nigeria added palm oil to the list of 43 items restricted from accessing the forex at the official rate to force its production locally.

However, the apex bank said despite adding the item to restriction, Nigeria still spends $500 million on its importation yearly.

“Despite placing oil palm in the forex exclusion list, official figures indicate that importation of palm oil had declined by about 40 percent from the peak of 506,000 Metric Tonnes (MTs) in 2014 to 302,000 MTs in 2017.

“This indicates that Nigeria still expends close to 500 million dollars on oil palm importation annually and we are determined to change this narrative,” Godwin Emefiele, the Governor of the Central Bank of Nigeria stated.

Efforts by the apex bank to encourage local producers to embrace backward integration failed as they turn down the 9 percent interest rate provided by the central bank under the Anchor Borrowers Scheme.

The National President, National Palm Produce Association of Nigeria, Henry Olatujoye, said it is not going to work until the CBN lower interest rate to around 2 percent given palm oil is a crop with four-year maturity.

He said, “If one obtains a minimum loan of N1bn at an interest rate of nine per cent, one would be paying N90m every year.

“It takes four years for oil palm tree to fruit. It then means that the person will pay N360m on interest alone by the time the fruits come out.”

The inability to meet local demand has led to importation at an even higher cost as global scarcity bolster prices.