Economy

Nigeria Moves to Boost Cocoa Sector

Published

6 years ago

June 11, 2018

Cocoa House in Ibadan, southwest Nigeria, was built with the earnings from exports of cocoa beans and at 26 storeys was once the country’s tallest building.

Profits from sales of the commodity — prized around the world as the basic ingredient for chocolate — used to be ploughed into providing free education and health services, rural development and other infrastructure projects.

But today, like the sector from which it takes its name, Cocoa House is a shadow of its former self: the paint is faded, the roof is failing and offices lie empty.

“Cocoa House used to be the glory of the west,” said Pa Olusina Adebiyi, referring to Nigeria’s former Western Region, which was reorganised into smaller, separate states from 1967.

“If you go there now, it’s an eyesore with all sorts of characters loitering in the area,” the 85-year-old former clerk in the building told AFP.

Agriculture was once the mainstay of Nigeria’s economy and provided jobs for more than 70 percent of the population until the discovery of oil.

President Muhammadu Buhari and his government are now trying to revive agriculture to diversify the oil-dependent economy that has been battered by the fall in global crude prices.

One sector seen as ripe for development is cocoa and the Cocoa Association of Nigeria (CAN) has outlined a 10-year action plan to boost production.

“We have made laudable recommendations that can change the cocoa story in Nigeria,” said CAN president Sayina Riman.

“We hope those recommendations will be faithfully implemented in the interests of the industry.”

– Price differences –

Riman pointed out that Nigeria’s oil industry, which accounts for some 70 percent of government revenue and 90 percent of foreign earnings, was initially developed using cocoa money.

As oil’s stock rose, cocoa’s declined and since the 1970s, it has been the West African giant’s “most neglected commodity”, he added.

Production in 2016 was 237,000 tonnes, according to data from the UN Food and Agriculture Organization. Ivory Coast produced 1.47 million tonnes and Ghana 859,000 tonnes.

Nigeria has two cocoa harvests: the smaller mid-crop from April to June and the main crop from October to December.

On his three-hectare (7.4-acre) cocoa farm in the village of Sofolu in Ogun state, Oluranti Adeboye was busy with a cutlass and a long stick.

“The weather has been good this year. Early rains have boosted my crop,” said the skinny 62-year-old former civil servant, as he prepared to harvest ripe cocoa pods.

“These cocoa pods are better than what I got last season.”

Bare-chested, he gathered the pods into sacks to ferment before drying them in the sun for sale to buyers for export.

Adeboye said farmers were losing crops to pests and black pod disease — a fungus that affects cacao trees — while they had limited access to better seedlings.

“These trees were planted more than 10 years ago. They are old and worn-out. We need new seedlings and improved varieties but the resources are not there,” he said.

Adeboye grumbled about young people’s lack of interest in cocoa farming while Sunday Ojo Folorunso, from neighbouring Ondo state, complained about commodity prices.

“Currently, we sell a kilogram of cocoa for 650 naira at the farm while a metric tonne is between 650,000 naira and 680,000. This is far too small for our efforts,” he said.

“Farmers in Ivory Coast and Ghana are well-motivated to increase productivity because they are paid handsomely for their crops.”

– Funding problem –

Experts and scientists said Nigeria can boost production with improved seedlings, fertilisers, new farming methods, pesticides and better coordination among research bodies.

“There is great future for the industry in Nigeria,” said Ranjana Bhattacharjee of the International Institute of Tropical Agriculture (IITA) in Ibadan.

“Farmers can be assisted to raise output from an average of 300kg per hectare to 800kg per hectare to boost their productivity and income.

“What is needed is concerted effort by all the stakeholders on how to provide farming materials to farmers to boost their output.”

Bhattacharjee said Nigeria should take a cue from Ivory Coast and Ghana which process cocoa beans into chocolate and other products to earn more money.

Nigeria used to have more than 20 processing factories but poor electricity supply and other amenities cut that back to three.

One scientist at the state-run Cocoa Research Institute of Nigeria (CRIN), who asked not to be identified, said funding was an issue for research.

“At CRIN, you will find aged trees that are no longer producing. Some of them are as old as the institute itself,” he said. CRIN was set up over 60 years ago.

(AFP)

Up Next

FG to Provide N37bn For Private Meter Providers

Don't Miss

Impose Levies on Plastics, Don Tells Govt

Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

Comments

Economy

Fed Slashes Interest Rates by 0.5% to Steady Job Market and Inflation

Published

5 days ago

September 18, 2024

Samed Olukoya

The Federal Reserve on Wednesday enacted its first interest rate cut since the early days of the Covid pandemic, slicing half a percentage point off benchmark rates in an effort to head off a slowdown in the labor market.

With both the jobs picture and inflation softening, the central bank’s Federal Open Market Committee chose to lower its key overnight borrowing rate by a half percentage point, or 50 basis points, affirming market expectations that had recently shifted from an outlook for a cut half that size.

Outside of the emergency rate reductions during Covid, the last time the FOMC cut by half a point was in 2008 during the global financial crisis.

The decision lowers the federal funds rate to a range between 4.75%-5%. While the rate sets short-term borrowing costs for banks, it spills over into multiple consumer products such as mortgages, auto loans and credit cards.

In addition to this reduction, the committee indicated through its “dot plot” the equivalent of 50 more basis points of cuts by the end of the year, close to market pricing. The matrix of individual officials’ expectations pointed to another full percentage point in cuts by the end of 2025 and a half point in 2026. In all, the dot plot shows the benchmark rate coming down about 2 percentage points beyond Wednesday’s move.

“The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” the post-meeting statement said.

The decision to ease came “in light of progress on inflation and the balance of risks.” Notably, the FOMC vote was 11-1, with Governor Michelle Bowman preferring a quarter-point move. Bowman’s dissent was the first by a Fed governor since 2005, though a number of regional presidents have cast “no” votes during the period.

“We’re trying to achieve a situation where we restore price stability without the kind of painful increase in unemployment that has come sometimes with this inflation. That’s what we’re trying to do, and I think you could take today’s action as a sign of our strong commitment to achieve that goal,” Chair Jerome Powell said at a news conference following the decision.

Trading was volatile after the decision with the Dow Jones Industrial Average jumping as much as 375 points after it was released, before easing somewhat as investors digested the news and considered what it suggests about the state of the economy.

Stocks ended slightly lower on the day while Treasury yields bounced higher.

“This is not the beginning of a series of 50 basis point cuts. The market was thinking to itself, if you go 50, another 50 has a high likelihood. But I think [Powell] really dashed that idea to some extent,” said Tom Porcelli, chief U.S. economist at PGIM Fixed Income. “It’s not that he thinks that’s not going to happen, it’s that he’s not he’s not pre-committing to that to happen. That is the right call.”

The committee noted that “job gains have slowed and the unemployment rate has moved up but remains low.” FOMC officials raised their expected unemployment rate this year to 4.4%, from the 4% projection at the last update in June, and lowered the inflation outlook to 2.3% from 2.6% previous. On core inflation, the committee took down its projection to 2.6%, a 0.2 percentage point reduction from June.

The committee expects the long-run neutral rate to be around 2.9%, a level that has drifted higher as the Fed has struggled to get inflation down to 2%.

The decision comes despite most economic indicators looking fairly solid.

Gross domestic product has been rising steadily, and the Atlanta Fed is tracking 3% growth in the third quarter based on continuing strength in consumer spending. Moreover, the Fed chose to cut even though most gauges indicate inflation well ahead of the central bank’s 2% target. The Fed’s preferred measure shows inflation running around 2.5%, well below its peak but still higher than policymakers would like.

However, Powell and other policymakers in recent days have expressed concern about the labor market. While layoffs have shown little sign of rebounding, hiring has slowed significantly. In fact, the last time the monthly hiring rate was this low – 3.5% as a share of the labor force – the unemployment rate was above 6%.

At his news conference following the July meeting, Powell remarked that a 50 basis point cut was “not something we’re thinking about right now.”

For the moment, at least, the move helps settle a contentious debate over how forceful the Fed should have been with the initial move.

Economy

Condemnations Trail Dangote-NNPCL Fuel Price Deal As Petroleum Crisis Persists

Published

5 days ago

September 18, 2024

Ugwoke Ogbodo

There is widespread condemnation over the fuel price deal by the Dangote Refinery and the Nigerian National Petroleum Company Limited (NNPCL).

This is coming as some Nigerians have said that their hope of easing sigh of relief following the sector’s deregulation appeared to have been dashed as the price of the Premium Motor Spirit (PMS) commonly known as petrol has continued to hit the roof.

For the Minority caucus of the House of Representatives, the N980 per litre of pump price as agreed by NNPCL and Dangote Refinery is outrageous and exploitative.

Chairman of the caucus, Kingsley Chinda, said the development was a burden added to the already struggling Nigerians.

In a statement that he signed, the lawmaker expressed his outrage over the pump price that varies from N950 to N980 and above N1000 per litre depending on the parts of the country.

The statement said, “We find this pricing regime to be not only burdensome but utterly unacceptable, particularly in light of the fact that this fuel is refined locally.”

The lawmaker emphasised that locally refined fuel should be priced significantly lower than imported fuel, as it avoids costs such as landing charges and import duties, insisting that the pricing model was wrong for all intents and purposes.

“It appears Nigerians are unfairly exploited, especially at a time when many are facing severe economic challenges,” he said, urging NNPCL and Dangote Refinery to reconsider their stand in the interest of the poor masses.

The statement warned that allowing the current pricing arrangement to continue would only deepen the economic hardships of millions and erode trust in local refineries’ ability to deliver affordable fuel.

The caucus called on regulatory bodies and the government to urgently review the pricing framework to ensure Nigerians are not subjected to unsustainable fuel prices.

Also reacting, Senior Advocate of Nigeria and human rights activist, Femi Falana, condemned NNPCL for its role in setting the price of petrol, asserting that the actions of state oil companies are illegal and violate the Petroleum Industry Act (PIA).

In a statement, Falana cited Section 205 of the PIA, emphasising that the law requires petroleum prices to be determined by free market forces, not by the NNPCL.

He argued that the company’s involvement in price-setting contradicts the very deregulation process outlined in the law.

Economy

Ubeta Project to Produce 350 Million Standard Cubic Feet of Gas Per Day Once Operational – FG

Published

5 days ago

September 18, 2024

Ugwoke Ogbodo

The Federal Government of Nigeria has said that once the Ubeta gas field is fully operational, it will produce 350 million standard cubic feet of gas per day.

With this dream realised, the Federal Government said the anticipated achievement would enhance energy security, attract investments, and strengthen collaboration with key partners.

This was made known by the Special Adviser to President Bola Tinubu on Energy, Olu Verheijen, at the inaugural US-Nigeria Strategic Energy Dialogue, hosted by the US State Department in Washington, DC.

Recall that the Nigerian National Petroleum Corporation (NNPC) Limited, in partnership with French energy giant TotalEnergies, had in July planned to invest a significant $550 million to develop gas facilities in oil-rich Rivers State.

Verheijen had announced the kickoff of a $550 million upstream gas project between Nigerian National Petroleum Corporation Ltd. (NNPCL) and TotalEnergies for the development of the Ubeta field.

At a luncheon during the dialogue, Verheijen mentioned that the upstream gas project would produce 350 million standard cubic feet of gas per day once operational.

A statement from Morenike Adewunmi, Stakeholder Manager, Office of the Special Adviser to the President on Energy, quoted Ms. Verheijen as informing the gathering that President Bola Tinubu’s major energy reforms since June 2023 have been aimed at enhancing energy security, attracting investments, and strengthening collaboration with key partners, including the US government.

According to her, the reforms have significantly improved the viability of Nigeria’s gas-to-power value chain.

She explained that in support of the reform efforts, the President issued five new executive orders designed to offer fiscal incentives for investment and reduce the cost and time required to finalize and implement contracts for developing and expanding gas infrastructure.

Verheijen said that the directives aim to immediately unlock up to $2.5 billion in new oil and gas investments in the country.

She acknowledged the valuable support of financing and technical partners, including the US government, the World Bank, and the African Development Bank, in efforts to expand electricity access and reliability through both grid and off-grid solutions.