Nigeria battles to revive ailing oil palm sector

Standing beside the piles of dark red palm fruits ready for crushing for their essence, Nigerian farmer Micah Ojo hopes to cash in on the government's drive to revive the country's once thriving palm oil business. His farm is one of the small plantations scattered across southern Nigeria where the government is investing heavily in palm industry as part of its drive to diversify away from petroleum and help create jobs. 

Entangled, since the fall in oil prices in 2016, in an economic crisis that has been further aggravated by the Covid-19 pandemic, Africa's most populous country must diversify its economy and create jobs for its more than 200 million inhabitants.

As Africa's largest oil producer and the continent's largest economy in terms of GDP, Nigeria has decided to invest massively in palm oil, of which it was the world's leading producer in the 1960s.

Now the world's fifth largest producer, it imports nearly half of the two million tons consumed annually in the country, further depleting foreign exchange reserves already depleted by falling oil prices.

But Micah Ojo, who farms one of the small plantations dotting Akwa Ibom and other southern Nigerian states, where rows of oil palms line the roads but many mills have been abandoned, complains that he does not benefit from the loans the government provides through the central bank to large farms and investors.

"This is a sector that needs a lot of capital, we need the government to come and help us", he pleads, the central bank loans "are not going to the local farmers (...) you only hear about it on the news".

In Edo State, the palm and rubber trees of the Okumu Oil Palm Company cover more than 33,000 hectares of land.

These plantations were partly financed by a loan of 14 billion naira (29 million euros), contracted as part of the various development plans launched in recent years by the government, for the purchase of new and better quality seedlings and to help producers develop new plantations and factories.

"This has helped us a lot to expand," Okomu's managing director, Graham Hefer, a South African executive who has been running the company since 2007, told AFP.

Small producers in difficulty

Founded in 1976, Okomu produces 40,000 tons of crude palm oil (CPO) per year and hopes to double its production by 2025, with the commissioning of two new plants by next year.

But the lack of infrastructure, the deplorable state of the roads or the incessant power cuts are holding back the development of this sector, like many others in Nigeria.

"We are seriously pushing the government to address these concerns," says Hofer.

The palm oil industry has come under fire around the world for contributing to deforestation and the loss of community land. But its supporters say it contributes to local development and creates jobs.

In Akwa Ibom State, local authorities say they are using a loan from the Central Bank to rehabilitate more than 3,000 hectares of an oil palm plantation that has been abandoned for more than 30 years and has 200,000 palm trees and a nursery with a capacity of 300,000 plants.

Micah Ojo now employs 30 people, up from five when he started. But he needs additional funds to be able to cultivate an additional 150 hectares of his land.

Small-scale farmers - who account for 70% of production, according to Hefer - say they are excluded from central bank financing.

"Banks will only lend to large, established producers with significant sources of income," says a representative of the Nigerian Plantation Owners Forum, which brings together players in the sector.

"These companies are, for the most part, multinationals. The small producers that the programs are supposed to target do not have access to them," he laments.

According to the association, which has called on the government and donors to grant small producers loans on favorable terms, it takes between 3,800 and 4,800 euros and a minimum of three years to develop a single hectare of oil palm.

The small producers also want the state-run Nigerian Institute of Oil Palm Research (NIFOR) to help them improve seedlings or fight pests and diseases, in order to become more competitive.