The Central Bank of Nigeria (CBN) has begun partnership initiatives with 11 palm oil producing states with a view to reviving the sector.
The apex bank said this move was in line with federal government’s resolve to return Nigeria as one of the leading global producers of palm oil as well as diversify the economy away from crude oil, so as to insulate the economy from the shocks associated with volatility in crude oil prices.
CBN governor, Godwin Emefiele, disclosed this yesterday in Abuja at an enlarged meeting with the governors of the 11 oil palm producing states in the South South and South East regions and other top government officials.
The meeting was meant to elicit their buy-in and set a partnership model that would, with immediate effect, stimulate investments in the palm oil plantations such that within the next three to five years, the global share of the country’s oil palm production would more than double.
The CBN announced that loans would be granted through its Anchor Borrowers’ Programme and Commercial Agriculture Credit Scheme (CACS) at no more than 9% per annum to identified core borrowers in the sector for funding of their oil-related projects. He said the move forms part of the strategy to reduce Nigeria’s reliance on crude oil imports, diversify the productive base of the economy, create jobs and conserve foreign exchange.
Emefiele further disclosed that all the states in both regions had agreed to provide at least 100,000 hectares for the initiative. The programme is also expected to accommodate small holder farmers.
“Our ultimate vision is to overtake Thailand and Columbia to become the third largest producer over the next few years,” Emefiele told stakeholders at the meeting in Abuja yesterday.
Leadership reports that the Bankers’ Committee had established a special sub-committee to make recommendations on sustainable financing models for oil palm and four other critical agricultural commodities that include cocoa, sesame seed, shea-butter, animal husbandry and cashew.
Emefiele believes Nigeria would have been generating close to $10bn worth of foreign exchange annually, at the current global market price of $600 per tonne and an assumed production level of 16 million tonnes, if it had kept pace with its peers in practising improved cultivation of palm oil,.
Official records indicate that Nigeria still spends close to $500 million on oil palm importation annually despite the fact that the product is among the 43 items placed on forex exclusion list by the CBN, but Emefiele says “we are determined to change this narrative.” An estimated three million hectares of land is currently under cultivation across the oil palm producing zone.
Emefiele urged the state governments to make more land available to investors with proven financial and technical capabilities who would be able to support development of large-scale palm oil plantations in the country.
In his reaction, Edo State Governor Godwin Obaseki noted that 70,000 hectares of land were currently being cultivated in his state. Edo State has the largest palm estate in Nigeria and and the governor has called for critical examination of the entire process to avoid backlash.
“Let us develop a very clear plan. We can start with a plan of a million hectares. Let’s look at how to provide infrastructure to that land. We have to think of planting materials – where they would be sourced from,” he said, even as he commended the CBN for the low interest loans for the oil palm sector.
On his part, Abia State Governor Okezie Ikpeazu declared his state’s commitment to the initiative for “value addition.”
Declaring that Abia has a plan that is attractive for investors to explore, Okezie said there was no better way to restore the country’s glory than this kind of investment.
“We pledge the commitment of our state,” he affirmed. Akwa Ibom State Governor Udom Emmanuel, who was also at the meeting, noted that inappropriate pricing had been a major challenge to the palm oil business in Nigeria.
He called for incentives for the operators in areas of land clearing and provision of improved seedlings for the operators, adding that Akwa Ibom is poised to immediately begin domesticating the initiative in the state.
Similarly, the CBN met with stakeholders in the Cotton, Textile and Garment sector two weeks ago, and drew up measures to encourage local production of textile products, with an understanding that textile manufacturers would be allowed to import cotton in 2019, but they must engage in backward integration efforts that would support local cultivation of cotton in order to feed their factories by 2020.
Emefiele also announced that plans were ongoing to also address challenges in the cocoa, cassava, beef/cattle ranching, dairy and fish sectors.
Extends Deadline For MFBs Recapitalisation Meanwhile, the Central Bank of Nigeria (CBN) has extended the recapitalisation date for microfinance banks in the country. It has, however, directed the banks to come up with half of the new capital base by next year.
Leadership recalls that the capital base of micro finance banks (MFBs) was jerked up by almost 500 per cent in October 2018 with a deadline of 2020, raising concerns amongst operators who believed the timeline was too short.
The apex bank had raised the minimum capital base of national MFBs to N5 billion while that of state-based MFBs was increased to N1 billion.
Prior to the circular, the minimum capital base for national MFBs was N2 billion while state MFBs were required to have N100 million. Under the new capital base, Unit licence MFBs, which previously required N20 million minimum paid up capital to operate, will now require N200 million. But in a circular released yesterday and signed by the director, Financial Policy and Regulation, Kevin Amugo, the CBN said it reviewed the capital base to aid the recapitalisation process.
According to the circular, it revised the categories of MFBs with a view to ensuring their continued operations in the rural, unbanked and under-banked areas of the economy.
“Accordingly, unit microfinance banks shall comprise two tiers: Tier 1 unit microfinance banks, which shall operate in the urban and high density banked areas of the society, and Tier 2 unit microfinance banks which shall operate only in the rural, unbanked or under-banked areas.”
Under the categorisation, Tier 1 unit MFBs are to be capitalised to the tune of N200 million, while Tier 2 unit MFBs would have a capital base of N50 million.
State MFBs would have a capital base of N1 billion, while national MFBs are to be capitalised to the tune of N5 billion.
“To aid the process of recapitalisation, all microfinance banks shall be required to comply with the following: Tier 1 microfinance bank shall meet a N100 million capital threshold by April 2020 and N200 million by April 2021.
“Tier 2 unit microfinance banks shall meet a N35 million capital threshold by April 2020 and N50 million by April 2021.
“A state microfinance bank shall increase its capitalisation to N500 million by 2020 and N1 billion by April 2021 and a national microfinance bank shall hold a capital of N3.5 billion by April 2020 and N5billion by April 2021,” the CBN said