Nigeria’s cocoa processing industry has been choked by a N50 billion debt it owed commercial banks operators in the country.
This has led to a decline in the country’s value addition in recent years and resulting to a $2 billion annual loss, industry sources say.
Key players in the industry who spoke with BusinessDay said unless there is a well-defined policy for processing of agricultural commodities, the country would continue to exports it jobs and lose revenue it would have generated through value addition.
“Most of the indigenous cocoa processors are really under the heavy weight of debt and that why none is operating at full capacity today. The total debt in the industry today is not less that N50billipn between six processors,” said Akin Olusuyi, chairman, Cocoa Processors Association of Nigeria (COPAN) during a press briefing with journalists in Lagos recently.
“We have a total of eight cocoa processing firms in the country with only 2 functional. The two that are functional now are foreigner owned. There is no indigenous processor that is functioning now as we speak,” said Olusuyi who is also the chief executive officer of Ile Oluji Nigeria Limited.
He stated that the total installed capacity of cocoa processing plants in the country is 270,000 metric tonnes but cumulatively, the industry is operating below 15 percent capacity currently.
Nigeria, world’s fourth largest cocoa producer and supplier, saw the value of its global supply decline by 23.4 percent from 248,000 metric tonnes in 2014 to 190,000 tonnes in 2015, according to the International Cocoa Organisation (ICCO) in its latest data on global production.
According to COPAN, the debt incurred by the industry was as a result of the harsh operating environment in the country and the inability to secure loans at single digit interest rate.
“An average borrowing cost to any cocoa processors by any bank in the country is 25 percent interest rate, when processors in Ivory Coast and Ghana obtain loans at single digit. How can we be competitive?” asked Akin Laoye, executive director, FTN Cocoa Processors PLC.
“We are yet to access the EEG that was designed to cushion structural misalignment in our economy since 2013. Since last year we have been given approval by NEXIM and our banks but we are yet to get it,” said Laoye.
According to Olusuyi who was earlier quoted, the government has failed to provide a clear cut policy direction as to what it intends to do in terms of industrialising the economy through processing of agro commodities.
“This why our agriculture has remained at the rudimentary stage because the active players that take the commodity from the farmers do not add any value by processing it,” he added.
He noted that Nigeria cannot develop without developing agriculture to include processing. “The direction to economic growth is industrialisation and not the exporting of raw agric commodities,” he further stated.
Similarly, another challenge facing the sector is the crisis rocking the 65,000 capacity Multritrex Integrated, the country’s largest cocoa processor, which has cut industry production by over 26 percent, according to calculations.
Multritrex was shut down by the Asset Management Corporation of Nigeria (AMNCON) over N5 billion debt.
The company officials told BusinessDay that though firm had been handed over to a new receivership, production was at the peripheral level.
“Since AMCON took over Multitrex Foods, nothing meaningful has been achieved. The best option is to work out a plan so that the business can continue,” Olusuyi said.
On the global scale, cocoa grinding has been on the increase. “The grindings picture worldwide for the first quarter of the current cocoa season reflected a considerable increase, with Asian grindings data showing a 19.2 percent year-on-year increase to 177,450 tonnes,” data from ICCO latest cocoa monthly report show.
Josephine Okojie
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