Manufacturers call on Agric Minister to rescind ban on raw material

Investors and members of the Manufacturers Association of Nigeria (MAN) in the agricultural sector have called on the new honourable Minister of Agriculture, Chief Audu Ogbe, to help in the reversal of the Central Bank of Nigeria (CBN) forex policy that included one of their most important raw materials; Crude Palm Oil (CPO) on the ‘not valid for forex’ list.

Speaking in a forum with industrialists, MAN president, Dr. Frank Udemba Jacobs, said that forex should be made available for genuine manufacturers that use CPO as a major raw material for production of end goods such as noodles, biscuits, cosmetics, etc.

According to him, the decision by the apex bank has threatened the existence of several manufacturing companies who rely heavily on crude palm oil as a major raw material for production. “These companies have invested heavily in plants and machinery worth several billions of dollars in the country and what the CBN is indirectly telling them is that it could not be bothered with the challenges this policy is posing to our members”.

He revealed that the companies have been involved in the agricultural sector as part of their backward integration programme, thereby creating more jobs and strengthening Nigeria’s ability to be self-sufficient in food, beverage and cosmetic production. Dr Jacobs commended the present administration for its efforts in trying to revolutionalise local industries through this policy, but insisted that there are certain indices that must be taken into consideration before full implementation of such policy.

He explained that while the policy is a welcome development, there should be no sudden obstruction to importation of the raw material that is needed for local production, especially when demand for such material cannot be met locally.

According to IndexMundi, a data portal, the domestic palm oil produced in Nigeria totaled 930,000 MT in 2014. The consumption of palm oil in Nigeria amounts to 2.0 million MT per annum. The official figures states that the shortage in oil palm industry is estimated to be around 900,000 MT annually. This poses a very precarious situation for the manufacturing sector that depends largely on CPO as a major source of raw material.

If this shortage is not filled with importation of high quality food grade palm oil, the economy will lose further investment in the manufacturing sector as companies would be forced to shut down and relocate their business outside the country, like it happened in the past.