The Nigerian cocoa processing industry is facing a severe crisis, primarily due to inadequate funding for seedlings and a challenging business environment characterized by excessive taxation. These factors have contributed to a decline in the number of operational cocoa processing companies, hindering the industry’s growth and competitiveness. The Cocoa Association of Nigeria (CAN) has highlighted the urgent need for government intervention to address these challenges and revitalize the sector. While the Federal Government has recently emphasized cocoa processing, particularly chocolate production, the existing companies struggle to compete and remain profitable due to the high cost of production.
This high cost of production affects every stage of the cocoa value chain, from farmers to processors. Farmers lack sufficient funds to purchase essential inputs such as chemicals, while processors grapple with escalating operational costs, including exorbitant power expenses. Compounding these financial burdens is the issue of over-taxation, particularly by subnational governments. Processors face numerous levies and fees when transporting cocoa across state lines, adding significantly to their overall expenses. This creates an uneven playing field and discourages investment in the cocoa processing sector.
Beyond taxation, the ease of doing business within Nigeria poses another substantial obstacle. The cocoa industry is plagued by bureaucratic hurdles, corruption, and extortion by various agencies and individuals at different levels of government. Transporters face numerous roadblocks and illegal charges, driving up transportation costs and disrupting the smooth flow of cocoa from farms to processing facilities. Even within major cities like Lagos, the movement of goods is hampered by extortionate practices, further impeding business operations and increasing costs. This complex web of challenges makes it more appealing for Nigerian businesses to source cocoa from neighboring countries like Cameroon, Togo, and Ghana, hindering the growth of the domestic industry.
The CAN advocates for a holistic approach to address these multifaceted problems. They have called for a streamlining of regulatory agencies and a harmonization of taxes and fees to reduce the financial burden on cocoa businesses. The multiplicity of agencies, each with its own set of charges, adds unnecessary complexity and costs to the industry. A more efficient and transparent regulatory framework is crucial for fostering a conducive business environment. Moreover, the CAN emphasizes the importance of increased government support for cocoa farmers and processors, urging the Federal Ministry of Agriculture and the Federal Ministry of Industry, Trade and Investment to play a more active role in supporting the sector.
A glimmer of hope lies in the recently federally approved National Cocoa Management Board (NCMB), which is awaiting Senate ratification. The CAN views this as a potentially significant development, provided it is implemented effectively. They urge the NCMB to adopt the existing 10-year National Cocoa Development Plan, formulated by the earlier National Cocoa Management Committee. The CAN stresses the importance of adequate funding for crucial institutions like the Cocoa Research Institute of Nigeria (CRIN), recognizing its essential role in research and development for the cocoa industry. This funding will be critical for improving cocoa yields and quality, enabling the industry to achieve its growth targets. Moreover, recent engagement with the Federal Minister of Finance offers a promising avenue for addressing the industry’s concerns.
While the establishment of the NCMB represents a positive step, the CAN emphasizes that its success hinges on effective implementation. The true measure of its impact will be the tangible improvements it brings to the lives of cocoa farmers, processors, and exporters. Echoing this sentiment, the Cocoa Farmers Association of Nigeria (CFAN) advocates for a regulatory role for the NCMB, focusing on development, centralization, and protection of the cocoa sector, rather than direct involvement in trade. This shared vision underscores the need for a collaborative and strategic approach to revitalize the Nigerian cocoa industry, ensuring its long-term sustainability and competitiveness. The government must move beyond rhetoric and take concrete action to address the challenges facing the sector, creating a more favorable environment for growth and profitability.
