Nigerian cocoa processors squeezed by multiple taxation

… NAFDAC’s proposed export regulations to compound industry woes

Nigeria’s only five surviving cocoa processors are incapable of reaching their potential and helping to boost the country’s export revenue if the government at various levels continues to impose multiple taxes on them.

Key stakeholders in the cocoa processing subsector say the indiscriminate imposition of the same tax by the three tiers of government is preventing processors from scaling, boosting FX earnings and creating jobs.

They added that the National Agency for Food and Drug Administration and Control (NAFADAC’s) proposed export regulations will further compound the issues for processors if approved.

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Felix Oladunjoye, chairman of the Cocoa Processors Association of Nigeria (COPAN) at a recent media briefing said the processors are already burdened with multiple taxations ranging from FG’s export supervision levy, customs and agencies clearance, phytosanitary/health, and certificate of origin among other.

He said that processors currently pay N1.53 million as export levies to export per shipment of cocoa beans and N3.5 million per shipment of cocoa butter and liquor excluding shipping charges.

He added that the sector is also hard hit by a combination of factors among which is poor infrastructure, rising production costs, the continued fall in the value of the naira, and the Central Bank of Nigeria’s policy on the utilisation of foreign exchange.

He noted that the NAFDAC’s proposed export regulations would kill processors business, saying that the agency lacks the infrastructure and human capabilities to regulate numerous Nigerian sea and airport export transactions.

“Nigeria’s foreign exchange inadequacy will suffer more under the new NAFDAC’s export regulations,” he said.

According to him, the proposed export regulations by NAFDAC are a sheer duplication of efforts and functions of other government agencies.

He stressed that if passed into law by the National Assembly, it would result in multiple taxation, delayed shipments resulting in international contract default, heavy penalties on Nigeria’s exports, loss of employment and eroding profits.

The COPAN chairman said that setting up a cocoa processing factory in Nigeria today will cost nothing less than N60 billion and that those presently operating less than 30 percent of their capacities owing to the worsening business environment in the country.

COPAN highlighted specific sections of the proposed regulations – sections 3, 4, 17, and 18 – citing them as unfriendly to business.

These sections pertain to the application for export, product registration for export, and inspection processes.

COPAN pointed out that Section 17, which deals with issuing export certificates, would lead to a duplication of responsibilities.

“No business person can export any commodity out of Nigeria without obtaining an export certificate or licence. NAFDAC taking up this responsibility is a duplication of duty,” COPAN stated.

They further criticised Section 18, which grants NAFDAC the authority to seal any premises without a lawful order, describing it as draconian, potentially abusive, and inconsistent with Section 44 of the 1999 Constitution (as amended).

“Many of our members are battling huge debts from bank loans, which is forcing them to either substantially reduce staff strength or shut down operations, the effect of which is the reduction in the foreign currency being generated through semi-processed export commodities.”

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The chairman said if NAFDAC must carry out export regulation, it must do so by visiting cocoa factories to certify, saying each of its members has an already ISO certified laboratory in their factories and warehouses.

He stated that the numerous taxes will make the country’s processors less competitive when compared to its peers. “Nigeria has the least in terms of competitiveness among its peers.”

“Nigeria has been relegated to sixth position in cocoa production because of government policies. Today, we struggle to produce 200, 000 tons per annum.”

He attributed Nigeria’s position to the fact that whatever cocoa beans are produced are not consumed here but exported after being processed into cake, powder, liquor, and butter.