Wednesday, December 4, 2013

Reviving Nigeria lost glory in Palm Oil production

Stakeholders from Palm oil producing states, government agencies, corporate bodies and international partners are brainstorming on reviving the nations lost glory in the sector, Industry Correspondent Ayodele Samuel writes.
 Palm production remains a very significant sector of the Nigerian economy, that has existed for a very long time. In the 1960s, Nigeria was the leading producer and exporter of palm oil, accounting for 27 percent of the global market but today the accolades suddenly disappeared.
Presently Nigeria ranks 26th in the world of palm oil production, a feet dishearten to stakeholders in the sector as local production hardly satisfy her local demand.
President Goodluck Jonathan while declaring the median  International Palm Produce Conference (IPPC) called on stakeholders in the sector to explore available investment opportunities in palm produce industry in Nigeria taking advantage of investment friendly climate and various incentives that have been put in place by the present administration.
The conference held in Uyo, Akwa Ibom State was jointly organized by the Federal Ministry of Industry, Trade and Investment and the Federal Ministry of Agriculture and Rural Development in collaboration with the National Palm Produce Association of Nigeria (NPPAN) has as its theme "Investment in oil palm and its derivatives, a panacea for economic growth and sustenance"
President Jonathan represented by  Minister of State for  industry, Trade and Investment, Dr. Samuel Ortom, pointed out that the aim of the landmark conference was to bring together global stakeholders to share ideas on new technological development and ways of improving the quality and availability of palm produce in order to maximize the growing investment opportunities in both domestic and international palm produce trade.
He expressed satisfaction with the timing of the conference because, according to him, it was holding at a time when the government has put in place all necessary policies to create enabling environment and framework for sustainable business and economic growth in agriculture commodities such as the oil palm where we have significant comparative advantage.
 " as one of our cardinal goals under the Transformation Agenda, we are unrelenting in our effort to explore and unlock the enormous potentials of our agriculture. We are doing this through the rapid transformation of key agriculture value chains in order to meet our objective of adding additional 20 million metric tonnes of food to the domestic supply by 2015 and stimulate the creation of over 3.5 million jobs along the agriculture value chains. President  Jonathan noted that his government has identified oil palm as one of the important commodities and key drivers to promote and has intensified  efforts to provide enabling environment to accomplish this task.
Jonathan pointed out that Nigeria is an oil palm producing nation and was a foremost producer and exporter especially in the fifties and sixties, when the nation dominated the palm produce industry and became world largest producer and marketer between 1961 and 1965 contributing an average world production share of 39 percent. He regretted that we allowed this position to slip out of our hands.
He assured that his administration was resolved to return to the former glorious level of performance which is part of our overall commitment towards embarking on the sustainable expansion of the area under cultivation, promoting the replacement of semi wild grove with improved tenera planting material, upgrading the quality and number of palm oil mills and vegetable oil refineries in the country, and expanding our domestic and international market outreach.
Also speaking at the conference, Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina represented by   Dr. Dickson Okolo said that the fortunes of palm produce industry in the country has increased through improvement in the supply of planting materials and effort to support the production of 9 million improved tenera sprouted nuts by the Nigeria institute for Oil Palm Research which are being raised into mature seedlings and distributed to smallholder farmers in 24 states.
He added that his Ministry will distribute 73 motorized harvesters at subsidized and affordable price, each of which is capable of harvesting 500-900 fresh fruit bunches per day. According to him, "We are currently fabricating better mills for small and medium scale plantations to be made available soon to farmers and processors to support the now expanding scope of fresh fruit bunch harvest".
  The Governor of Akwa Ibom state, Chief Godwills Akpabio, represented by the Secretary to the state government, Mr.  Udom Emmanuel on his part said that investment in oil palm production would not only restore Nigeria pride and glory but would boast our economy and create jobs for teeming youths which in turn help in reducing unemployment statistics.
He added that his state has created enabling environment for investors and invested  heavily in oil palm production through assistance to oil palm producing plant across the state, provision of improved seedlings to farmers as well as soft loans and grant to women under the scheme call "Our Women  in Agriculture  Development Programme".

How new automotive policy would increase smuggling, drop revenue – Importers

The Federal Government's introduction of a new national automotive policy, aimed at encouraging local production of new vehicles prompted Ayodele Samuel to ponder, in this report, on the ability of existing local auto makers to meet demand at a reasonably affordable cost and the expected implications for the nation's economy.
With the Federal Executive Council's approval in October of the new national automotive policy meant to discourage importation of mainly cars and buses, the Federal Government raised tariffs on the importation of both new and used cars and buses by 50 percent.
With the policy becoming effective in January next year, prices of imported cars and buses are expected to rise astronomically as a result of the increased import duty.
Specifically, the new policy is expected to boost activities and production of local auto manufacturers, such as Innoson Vehicle Manufacturing Ltd, Nnewi; VON Automobile (formerly Volkswagen), Ojo, Lagos; National Trucks Manufacturers, Kano; PAN Nigeria, Kaduna and Stallion Motors. It is also expected that the policy will encourage existing automobile dealers, whose businesses are now facing a new challenge, to switch to assembling locally, instead of importing the fully built units.
"The above measures are to create an environment to support existing assembly plants and attract other Original Equipment Manufacturers (OEMs) who have expressed interest in Nigeria," the minister noted. The federal government aims at cutting down importation of automobiles in a backward integration policy that seeks to encourage production of cars and buses in the country.
However, the new policy is not going down well with operators in that sectors, they have many fears to worry about its implications on their businesses and the nation's economy,as they say the policy will invariably lead to loss of revenue, unprecedented increase in smuggling and massive loss of jobs in the ports with vehicle importers arguing that the cost of transportation will equally increase.
The importers, who already are soaked with fear over what next year will have in stock for them, said they were considering quitting the business to seek for other means of livelihood, while others said the business will now be conducted from the bush."We cannot pay the new duty and levy. Even if we do, who'll buy the car? Doing the business from Cotonou is now the only way," they said.
They maintain that illegal routes through which imported vehicles pass from neighbouring ports to Nigeria will resurface and that the Nigerian Customs Service must be ready to put their lives on the line in order to address the increased level of smuggling that will come with the implementation of the policy.
Most of the importers said that the move by the government will certainly lead to massive loss of jobs by operators in that sub-sector of the automobile industry, while others said that the business would no longer be of benefit to them, due to the expected low patronage.
Some, however, there is need for government to put in place facilities to enable the policy to be effective because the country lacks infrastructure that could make the new auto policy to work.
Chief Nnamdi Onwuamaegbu, who specializes in sells of second-hand cars, urged the government to reconsider the move, saying that it will have adverse effect on the economy.
He said the hike will make other neighboring ports more user-friendly and also increase the rate of smuggling of vehicles into the country.
"The various illegal bush paths that vehicles ply from Cotonou to Nigeria will resume again, "there are some riverine communities within that axis in Cotonou and Badagry and the smugglers will build more barges to convey smuggled vehicles from Cotonou and it will be another task for the Nigeria Customs to curb smuggling of vehicles," he told a journalist in Lagos.
He said the discouragement of imported used vehicles into the country will only affect the poor as the affluent Nigerians are the ones that will benefit from the new policy on vehicle.
"Importation and the sales of used vehicles in Nigeria have sustained so many people and I wonder why the government has chosen to punish the masses. I would have advised the government to allow the competition to continue because people love new cars, but they can't afford it, that is why they go for Tokunbo," he said.
The importer added that the policy is unfair as the few importers that will remain in the business will have to struggle to compete with foreign investors in the automobile sector.
"Most customers find it difficult to buy even the Tokunbo cars we sell in Lagos talk less of the new cars the government is willing to encourage."
Collaborating his stand, David Agunna frowned on the new tariff policy insisting that, "It is a way of reviving smuggling of vehicles in the country."
"Many of the informal operators will resort to smuggling so as to evade payment of duty. I know it will affect the economy because many people will have to look for another business to do, "he predicted.
The National President of the National Association of Government Approved Freight Forwarders, (NAGAFF), Chief Eugene Nweke, said that the increase will only enhance the fortune of neighboring
Cotonou Port.
He said with 35 per cent duty increase and 35 per cent levy, only few cars will enter the country through Nigerian ports. "Almost all imported cars meant for Nigeria will come through Cotonou and will be smuggled into Nigeria," he said.
Nweke said the federal government should have rehabilitated the motor vehicle assembling plants in the country before coming up with the policy.
"What is the state of Volkswagen of Nigeria in Lagos, the Anambra Motor Manufacturing Company (ANAMMCO), Steyr Nigeria in Bauchi, Leyland Nigeria in Ibadan and the National Truck Manufacturers in Kano. The policy will make the desired impact in creating jobs and attracting billions of naira in revenue
if these assembling plants are working effectively,'' he said.
He accused government officials for killing the local auto industry by their preference of imported cars.
He said the tariff hike will lead to astronomical increase in the cost of vehicles in the country, with the middle class not being able to afford even a 'Tokunbo' car. "The price of imported cars, currently being sold between N1.4 million and N3 million, would go up to about N5 million.
"Also the price of fairly used vehicles popularly called 'Tokunbo' being sold for N800, 000, will rise to N1.3 million or more," he regretted.
The NAGAFF President said that in deciding on the new tariff on cars, government failed to put into consideration the state of its borders. "We have 37 approved borders guarded by security officials, but we have about 200 unapproved routes where smugglers can use to bring in cars.
"I am afraid that the country will lose revenue through this policy and insecurity problem will also rise. Many people will be out of job as a result of the new policy,'' Nweke said.
A Nigerian Customs sourcewho spoke to Peoples Daily, but preferred anonymity,said that the government action will drastically affect customs revenue. He said the policy coming with the tariff hike on rice will lead to a sharp drop in customs revenue while Benin Republic will reap all the benefits.
"They did not consult Customs for their input," he said, "and that is very unfortunate."
A frontline customs clearing agent and former National President of the Association of Nigerian Licensed Customs Agents (ANLCA), Lanre Sanni Shittu, however opined that government is encouraging manufacturers of new vehicles in Nigeria and that does not stop the importation of Tokunbo vehicles.
"But the question is: how many Nigerians can afford new cars?" he queried."The policy should run in phases that is if government is serious about making sure that Nigerians use good cars; the manufacturing companies should be empowered by way of assuring them of infrastructures like regular power and to ensure that our iron and steel industries are working, other petrochemical companies must also be working in order to assist these companies", he advised, stressing that unless these things are in place, the policy cannot work.
Interestingly, Nigeria's neighbour, Benin Republic has taken position to feed fat from the new policy on automobile importation. The country, which enjoys the biggest trade volume with Nigeria through the land borders, has since taken advantage of the policy as a leeway to further deepen her breakthrough into Nigeria's automobile importation market.
The French-speaking country has announced an average of 35 per cent reduction of tariffs on vehicles imported into her country. The trade decision was a strategic move to make Nigerians resort to port of Cotonou to do more automobile importation business.
Expectedly, a policy such as this will herald uncertainties. Experts said the success of the policy would depend largely on government's sincerity and not towing the path of previous governments with similar initiative that only eventually benefited a few and created a monopoly.
According to a major Toyota dealer, who did not want his name in print, the new policy is the way to go if the government "provides a level playing ground and avoid eliminating certain players in order to help others."