The AFEX Commodities Exchange Limited (AFEX) has made it known that in order to secure the future of Nigeria, the leaders need to focus on agriculture, particularly cocoa production.

In a recent tweet chat with Nairametrics, AFEX emphasised that the country had witnessed the crippling powers of a drop in oil prices, and agriculture could serve as huge leverage for the country.

Highlighted advantagesAccording to AFEX, agriculture does four things for a developing country like Nigeria. 

  • It creates gainful employment – Agro-led industrialisation.
  • It helps with food security.
  • It helps in the diversification drive of the economy
  • Finally, it helps to drive foreign exchange earnings of the country through commodity export.

Why cocoa in particular? The agricultural innovative solutions provider, in the course of the interview, revealed why cocoa should be prioritised in the country. The followings are its reasons.

  • Nigeria is a crude oil producing country with low per capita income. Saudi Arabia with 34 million people produces 10 million barrels per day, while Nigeria with about 200 million people produces a little over 2 million barrels per day.
  • Crude oil is a finite resource and not renewable. Also, the industry is exposed to disruptions. With other sources of renewable energy and the move by countries to embrace clean energy, countries with government earnings completely reliant on crude oil will face fiscal challenges.
  • The crude export process creates an extremely very little number of jobs and has almost no economic multiplier effect, while sector like agriculture is inclusive, creates wealth and helps build new cities.
  • Cocoa is Nigeria’s leading agricultural exportNigeria is the world’s 4th largest global producer of Cocoa and the 3rd largest African exporter. What ways can we capitalise on this statistic?
  • Nigeria used to be the largest exporter of Cocoa, but now, the country produces and trades only a fraction of what it did two decades ago. In the same time horizon, Cote D’Ivoire has increased its output by more than five folds.
  • With the declining yield per hectare and the age of Nigeria’s cocoa trees, the country needs to embark on an aggressive tree planting exercise, provide the right incentives for farmers and researchers, exporters and processors and allow the industry to rejuvenate.

AFEX cocoa

When asked if Nigerian companies can ever dominate the world’s chocolate production market,  AFEX officials said Nigerian firms were a very long way from dominating the chocolate Industry by value or by volume. The firm, however, maintained that the Nigerian firms could be significant exporters of chocolate raw materials to the developed countries if the government is focused on the right structures to actualise this. 

AFEX’s proposal to FG: The firm’s intervention in the revitalisation of the cocoa sector needs to be inclusive, holistic and urgent. According to AFEX, there must be a simultaneous focus on the three core elements of the value chain, which are highlighted below.

Production: The sustainable production of new fields must be on a massive scale to close the gap. The Cocoa Research Institute must be revitalised and funded as it is the link to international and regional research institutions for sharing of best practices and knowledge.

Aggregation and grading: State governments need to invest in cocoa processing clusters, dryers, grading sheds, and bonded warehouses. 

This will increase the quality of crops of Nigerian origin and fetch the higher value, create more transparency in the process, and the states can increase their produce tax earnings, and buyers will have the right quality for onward processing.

Marketing: Africa needs to set prices of cocoa, and not be a price taker in a commodity it produces. This can only be achieved through the introduction of commodities exchanges in the country of origin.

If Nigeria trades her cocoa from West Africa on our future exchanges, the world will be forced to buy through it.