Why Ayade’s Proposal To Build Cocoa Factory In Cross River Is A Welcomed Development BY EMMANUEL ETIM

In Breaking News, Business & Economy, Columnists, National News, Opinion, Politics
Emmanuel Etim
Emmanuel Etim

Cocoa which belongs to the family Steruliacaea and genus Theobroma was discovered in 18th century at the Amazon basin and later spread to other tropical areas of South and Central America, and West Africa.

Since the end of the First World War, West Africa has been the highest producer of cocoa. The crop was eventually introduced into Nigeria in 1887. Nigeria as a developing country was rated the second largest world producer of cocoa in the 1960s.

The older Nigerians endlessly look back at the great days of the cocoa boom. People go on and on about the funds from cocoa helping to build the famous Cocoa House in Ibadan. As a robust source of foreign exchange, cocoa provided infrastructural development that still exists in the South West.

Up to 1960, tree crops, notably cocoa, oil palm and rubber largely led agricultural export in Nigeria, and cocoa still continues in this role. Cocoa is the single agricultural export commodity that has earned foreign exchange more than other crops, offers employment to many people, both directly and indirectly, and serves as an important source of raw materials, and source of revenue to governments of cocoa producing states.

For a long time, the crop has been generating substantial foreign exchange earnings for the country. However, the production of this important cash crop for export has suffered a reduction in the recent years in the country owing to a number of factors. Some of the factors include low yield, inconsistent production patterns, disease incidence, pest attack and use of simple farm tools.

Cross River State is known as the second largest cocoa producer in Nigeria with production in excess of 80,000 Metric Tons a year. Out of a total of eighteen Local Government Areas (LGAs) in the state, three are considered the leading producers of cocoa. These Local Government Areas include Ikom, Etung and Boki.

There are ongoing plans by the Cross River State government through the ministry of Agriculture to substantially increase the production of cocoa across the State through the engagement of the private sector in establishing commercial farms. Recently also the state government went ahead to sell five government-owned farms in a bid to boost production of the commodity with private investment.

Cocoa from Cross River State has been judged one of the best in Nigeria even as the state has the potential to become the leading producer of cocoa in Nigeria. Even with all these wonderful testimonials, the product is not being processed in the state as there is no processing plant in the state. This is why the proposal of the newly sworn in Governor Sen. Benedict Ayade to build a cocoa processing plant in the state is a welcomed development.

About 85 percent of total cocoa production in Nigeria is exported as cocoa beans while the remaining 15 percent is processed locally into butter, liquor, powder and cake before being mostly exported. The failure to process cocoa locally has led to loss of jobs and other economic benefits.

A predicted steady and relatively high international cocoa price and potential to improve productivity makes this an attractive investment prospect. As the nation’s crude oil wealth begins to dwindle, value addition to cocoa may be one among many great options for Nigeria’s migration towards a diversified economy.

Cocoa remains Nigeria’s highest non-oil export with reports revealing that the country realizes about $900 million from the export of cocoa annually. Nigeria’s Ministry for Industry, Trade and Investment, acknowledges that “Nigeria is the world’s 4th largest producer and exporter of cocoa”.

Value addition is the backbone of industrialization for Cross River State. It is commendable that cocoa processing is a part of the priority of Cross River State government’s industrial development agenda. In seeking to realize this vision, the state government must however be mindful of the pitfalls in the sector.

It is important to note that several efforts at processing cocoa beans in Nigeria in the past have been frustrated. The frustration comes from factors such as unfavorable policies in the sector, foreign influence on processing companies and government subsidy and export charges on processed and unprocessed cocoa.

One of the erstwhile foremost cocoa processing factories in Nigeria, said to be the first in Africa, Cocoa Industries Limited, Ikeja, Lagos, has since stopped production, with the facility now turned into a warehouse for imported goods and motor vehicles.

When the firm was at its peak, it had about 19,000 people in its employ. Presently, there are about 17 cocoa processing companies in Nigeria. Of the 17, only nine are functional and out of the nine, only two are owned by foreigners.

If the Cross River State government must succeed in promoting the processing of cocoa in the state, my suggestion will be for the government to go into a public private partnership (PPP) with reputable firms within or outside Nigeria or attract Foreign Direct Investment to this sector in the state just like Wilmar PZ, which the administration of Sen. Liyel Imoke brought into the state which is now the leading producer of Oil Palm in Nigeria.

It is expected that the Cocoa processing firm when set up will be processing 20, 000 metric tones of cocoa into cocoa butter, cocoa liqueur, cakes and powder, among others. This will have tremendous impact on the cocoa value chain in the state especially in increasing production and supporting micro and small scale industries servicing the sector.

One of the competitions for the proposed cocoa processing plant include Agro Traders Limited based in Ondo State which recently completed its N2.6bn cocoa processing factory from a loan facility obtained from Standard Bank Group through its Nigerian subsidiary Stanbic IBTC with support from the Bank of Industry.

By processing cocoa in the state, jobs will be created for the teeming unemployed youths and the state’s economy will grow. We must also devise a strategy to ensure increased local consumption of cocoa products and take advantage of the large population of Nigeria to expand the market.

Emmanuel Etim is a development consultant and writes from Calabar

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