Nigerian Government, Economy And Plight Of Processed Oil Seeds Industry, By Emmanuel Ado

Emmanuel Ado

Indonesia and Malaysia,both dominate the global palm oil production,accounting for more than 85% of the total world production.Undoubtedly Indonesia is the largest producer and exporter of palm oil worldwide,while Malaysia which currently accounts for 39 % of the world palm oil production and 44% of the world exports,comes a close second.But Malaysia is very determined to become number one,and that’s a very big problem for Nigeria,as the indications that they will employ all known tricks – straight and crooked to achieve their ambition of ensuring that Nigeria remains its dumping ground for vegetable and edible oil.

Unfortunately Nigeria is not in any position to check the combined onslaught of Malaysia and Indonesia- from production to marketing. The situation is worsened by the renowned notoriety of Nigerians for unpatriotic acts – from smuggling to Policy summersaults,all clearly in favour of the Asians,whose onward match towards consolidating their capture of the Nigerian market, from every indication looks unstoppable.Malaysia for instance has the Malaysian Palm Oil Council(MPOC), that is charged with the responsibility of “spearheading the promotional and marketing activities of Malaysian palm oil in the effort to make it the leading Oil in the Global oils and fats market”. Is the marketing activities part of the reason for Nigeria’s policy summersaults?

Officially the federal government has prohibited the importation of margarine, palm oil products/vegetable oil, cement, rice, meat and pro¬cessed meat products, vegetable and processed vegetable products, poultry – chicken, eggs, turkey ,rolled steel sheets and galvanised steel sheets.The extensive list includes roofing sheets, wheel bar¬rows(that Benue State uses for poverty alleviation), wood fibre,head pans, metal boxes and contain¬ers, enamelware, steel drums, steel pipes, wires, rods, wire mesh, steel nails, security and razor wire, wood particles boards and panels, ply¬wood boards and wooden doors. Not only are these prohibited items available,but their quality most times are sub – standard and cheap. In the case of palm oil/ processed vegetable products the tragedy is that we are dealing with the importation of residue of industrial wax,with its deadly consequences on the health of Nigerians and the economy.

According to Samailla Barau Falke,National President of Oil Seeds Processors of Nigeria(OSPAN), unless the Nigerian government takes decisive steps to curb smuggling of poorly adulterated vegetable products into Nigeria, the oil industry will close down,with the attendant consequences of not just job losses,but worsening cases of Nigerians coming down with none infectious diseases,all thanks to the unscrupulous and condemnable activities of Nigerians and indeed the government that remains confused as to what it wants. At risk is an investment of about 5 trillion naira.

OSPAN in a Save our Soul (SOS), letter to the Kaduna State Governor Nasir El – Rufai,asking for his urgent intervention wrote,” Sir, if our industries (worth 5trillion naira) are alłwed to collapse due to the activities of unscrupulous “portfolio” businessmen,your efforts to industrialize Kaduna State, would be defeated.But God forbid such fate for Kaduna State, which is yet to recover from the collapse of the textile industries,hence our request for your intervention” .

So far the famous oil mills of Kano, is a shadow of itself as the Nigerian Customs Services has proved itself incapable of stopping the smuggling of adulterated vegetable oil,which has forced the mills to shut down.And with their closure went about 50,000 jobs.The story is not different in Kaduna, Aba,Jos,Benue,Lagos and Port Harcourt. While those that are still in production are limping,the others to survive are contemplating joining the importation bandwagon, which is very sweet.

The biggest threat facing the industry is the government – its policies and the failure of its agencies like Customs and NAFDAC to enforce policies. The Senate President Bukola Saraki,described smuggling “as the singular greatest threat to the delivery of the promises made to Nigerians by president Muhammadu Buhari on the diversification of the economy”. Granted there is a shortfall in production of about 300,000 tones against the yearly consumption of about 1.6 million tonnes of vegetable oil, but importation isn’t the way to go.But having decided to allow importation,the window shouldn’t have been left too wide for the importation of finished vegetable oil. The right way,was the Presidential Initiative on Vegetable Oil Production, which would have addressed increased production,which will ultimately address the supply deficit. But like everything Nigerian the importation of oil has come to stay and is daily subjected to abuses. So while the government claims it wants to help the industry grow, it is in fact doing more damage than good – killing in cold blood the local industry.

Research has shown that the oil palm,is the most efficient oil bearing crop. It requires only 0.26 hectares of land to produce a tonne of oil, while soybean, sunflower and rapeseed require 2.22, 2 and 1.52 hectares, respectively, to produce the same quantity of one tonne.Government would have made improved seedlings that will help increase yield available. In Argentina,a hectare of soya beans,yields more than 6 tonnes,while it yields only a tonne in Nigeria.This is the road Nigeria will never travel.

Politicians who couldn’t get into any of the crude oil scams,were happy to latch on to the vegetable oil gravy train.After all oil,is oil,whether palm or crude. It is the Political patronage by the Federal Government of Nigeria to our rent elites to import refined vegetable oil, Soya bean meal and related products, that has sent the local vegetable oil and other associated manufacturers to intensive care units,wíth their fate hanging in the balance.Maybe the real desire of government is the death of the industry.

The irony of this pathetic situation is that while the Federal Government mouths its determination to encourage local industry,it undermines local production by issuing waivers to portfolio businessmen to import and make very cheap money.When will the government wake up to the reality that Import waivers is sending vegetable oil processors to their untimely death? And that the Health of Nigerians is daily being compromised? Waivers are just too sweet, that it actually makes economic sense to import than to produce.

Nigeria obviously doesn’t know what it wants it in terms of the industrialization options,so it will constantly be at the receiving end of more organized economies of Malaysia and Indonesia. Assuming the federal government prefers importation like,it has continued the importation of all sorts of Petroleum Motor Spirit,it should at least make some revenue and safe guard the health of Nigerians,by ensuring that the imported finished vegetable oil meets standards.

While other countries have their defined interest and strategy Nigeria continues to wobble and fumble. Nigeria is high on talk, but very low in delivering. For instance Malaysia intends by 2020 to earn 56.5 billion United States dollars,from an industry which already accounts for 5-6% of the GDP. The Malaysian palm oil industry employs both directly and indirectly more than 600,000 people, high-skilled and low-skilled labour. It hopes to create a further 66,000 jobs,through significant investment in research.Both countries had the same objectives – diversification of its economy. But while Nigeria is still summersaulting,Malaysia under its agricultural diversification programme ,to check the dependence on rubber and tin,introduced land settlement schemes with the twin objective of eradicating poverty amongst the landless class and earning foreign exchange.Today it has achieved and indeed surpassed those objectives.

For instance, the Federal Government kept insisting on a 35% tariff on imported Crude Palm Oil,so as to encourage the agricultural sector. But the government buckled under intensive lobby and not only was the 35% import duty lifted,but based on the lobby of the portfolio businessmen, the Jonathan administration granted waivers that are still in use to this day by the beneficiaries. The claim that they haven’t exhausted the total metric tons granted them can’t be true.Or are the waivers in perpetuity?

The then Minister of Trade & Investment, Olusegun Aganga, in justifying the removal of the tariffs claimed the tariff was “inhibiting the growth of multiple industries, including biscuits, vegetable oil, margarines, cereals, crisps, sweets and baked products, washing powder and cosmetics,” and that it would create ripple effects on multiple industries and, in the long run, cause higher food retail crisis”. But while Aganga was justifying it, Adams Oshimohle the former Governor of Edo State,took a patriotic stand against the campaign for the reduction of tariff from 35 per cent, because “every country must do what was in its interest, he added “We cannot revive our rural areas if we are opening up our markets for everyone to dump every junk”.

Nigerians should be concerned about what they consume,as evidence abound that the smuggled vegetable products are residues of industrial wax,refined and sold as edible vegetable oil.So not only are the smugglers killing Small and Medium Scale Enterprises (SME’s), they are also slowly killing Nigerians. The increased cases of non communicable diseases like kidney failure and cardiovascular disease- heart attack,strokes have been linked to adulterated vegetable products. Previously some these diseases were known to developed countries,but they are right at our doorstep. Vegetable oil products have very short life span,and with almost 90% contamination rate surly has high health consequences when consumed.

The appropriate government policy should encourage local production rather than importation. That should be our long term developmental strategy . Incentives like waivers that allows for the importation of finished vegetable oil,should be a very temporary measure, as it is not only bad for our economy,but is indeed another form of corruption. The harmful effects of waivers can’t be quantified. So long as the management of our national economy is based on whims and arbitrariness,so long will policies like waivers be thrown at our faces, because in the final analysis who cares. Waivers is detrimental to the economy – killing the local industry due to unfair competition ,job losses, Revenue etc.Dr. Simon Okolo, Chairman, New Era Group, a major player in the industry is right that waivers is “gravely devastating to the economy. Waiver is not only injurious to the economy, it’s a mockery of government’s agricultural revolution , diversification of the economy from sole dependence on crude oil export to export of agricultural goods and finished manufactured goods,”.

Unless the twin activities of smugglers and issuance of waivers is stopped,the vegetable oil industry will die. The animal feeds industry will also die,as the industry depends oil mills by products for its feeds. Nigeria will be confronted with serious cases of children suffering from malnutrition- stunted growth etc, as a result of the prohibitive cost of protein. The Government must map out a strategy for self sufficiency in refined vegetable products.The pity is that Nigeria doesn’t appreciate the challenge,talk less of having a strategy to respond to the onslaughts by the Asians.Why can’t Nigerian Customs Services police our boarders.Blocking these boarders is critical to the protection of the industry. The Nigerians working for the Malaysian Palm Oil Board,which has led to the establishment of tank farms in some Nigerian ports for the importation of finished palm oil from Malaysia, should be taxed out of existence.

When Fulani herdsmen strike it is attributed to our porous boarders,same when all manners of imports,including small arms. The question is, when will Nigeria address the issue of its porous boarders? Do we need to build a wall? Very critical is not just the protection of the vegetable oil industry,but the life and security of Nigerians. The threats of bio-terrorism is real and serious countries have taken steps to address them. The role of Nafdac in the situation is a pity,because the agency died the day Dr. Dora Akunyali left. It beats imagination non-registered oils that are contaminated and repackaged in unhygienic environment are sold openly?

Malaysia and Indonesia have shown what determination and political will can achieve and that no serious country desirous of economic development,should adopt importation as its development strategy,because it adds no value to the economy. Why can’t the federal government enforce a total ban on the importation of vegetable oil,which it has been mouthing since 2007? The massive importation of vegetable/edible oil through our neighboring countries under the ETLS (ECOWAS Trade Liberalization Scheme) at zero duty must be reviewed. ETLS is to expand trade, but the agreement is not in our National interest. The waiver and CPO imports through ETLS,is killing Nigeria. There must be exemption clauses that Nigeria can trigger. The least the government can do for these die hard industrialists,who already have to put up with the exorbitant cost of production in Nigeria,is to protect them.

 

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