Instead
of the desired returns on investment, they have however suffered huge losses
and indebtedness as a result of the harsh operating environment in Nigeria. A
prominent cocoa processor and Managing Director, Ile Oluji Nigeria Limited, Mr. Akin Olusuyi, was quoted as saying
in a new report that “the total debt in the industry
today is not less than N50bn.” According to him, the current capacity
utilisation in the industry is less than 20 per cent and the sector as a whole
is losing about N720bn annually.
Fellow
Nigerians, are you aware that our crude oil will soon become useless? Yes, it
will, in no distant time, become valueless owing to the fact that the countries
that rely on it as their only source of energy are developing more affordable
alternative sources of energy. When this finally happens, what will we do? How
are we currently preparing for this imminent economic doom? Which other sector
will continue to stabilize our economy? Nigerians, the only solution is
developing the agricultural sector. In fact, this is the only solution. Very
soon, the major source of revenue will become agriculture and agro-exports. How
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arm yourself with the contemporary trends in export trade. This manual explains
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Another
leading cocoa processor and the Managing Director, Multi-trex Integrated Foods
Plc, Mr. Dimeji Owofemi, said for
them to underwrite debts owed to banks, the government must intervene in terms
of facilitating long-term fixed asset refinancing loans at a single-digit
interest rate.
A
wholly Nigerian owned company consisting of two factories with installed
capacity of 65,000 metric tonnes of cocoa per annum, processing equipment and
machinery for manufacturing chocolate bars, drinks and others, Owofemi’s
company reportedly owed Skye Bank N8.5bn. In 2011, the Asset Management
Corporation of Nigeria bought over the loan facility.
Multi-trex’s
case became complicated when the Central Bank of Nigeria barred banks from
lending to companies indebted to AMCON above N5m. Following this, the firm became handicapped
and unable to access working capital to produce and pay back the debt owed to
AMCON. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
In
June 2015, the factory was shut. Over 300 workers were retrenched and its
modern processing plant and equipment are currently rotting away and exposed to
vandals. “If they can write off the loans of people who
borrowed to buy shares, why can’t write off our own? Underwrite the debts for
existing factories by half because most of them are made up of interests,” he
told newmen in a recent interview.
Although
the facility has been under lock and key for four years, interest on the loan
has been mounting, according to him. “The loan was
N9.1bn in December1, 2017; today, it has grown to N10bn. AMCON has to be
realistic and know that an asset that is shut down cannot be earning interest
for them. How can a shut factory accumulate N1bn debt in eight months?”
Owofemi
disclosed that his firm was being owed N4bn from the Export Expansion Grant
scheme of the Federal Government and suggested therefore that the firm’s debt
be written off with the N4bn.
An
Ogun State-based cocoa processor and Executive Director of FTN Cocoa Processors
Plc, Mr. Akin Laoye, said he owed
banks N4bn after investing N5bn in the plant. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
Production at his factory had been on and off due to paucity of funds and the
local banks attempted to throw the firm into liquidation, so Laoye had to
appeal to a foreign investor to buy into the business. The latest financial
statement of FTN Cocoa, a firm listed on the Nigerian Stock Exchange on
February 29, 2008, showed that its loss after tax rose from N263.4bn in 2016 to
N419.7bn in 2017.
The
company was also reported to have recorded a drop in revenue from N842bn in
2016 to N23bn in 2017; and the export of cocoa from the firm dropped by 99 per
cent from N508.2bn in 2016 to N1.9bn in 2017. It had a 94 per cent drop in
local cocoa sales from N334bn in 2016 to N21bn in 2017. The company last paid
dividend in 2017, according to reports.
The
Nigerian Export Import Bank had established a N500bn export stimulation fund
for exporters and Laoye is hoping to access it to continue production. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
The cocoa processors regretted that Nigerian banks were unwilling to finance
long-term projects. They complained that the cocoa sector in Nigeria was too deregulated;
while major cocoa producing countries such as Cote d’Ivoire and Ghana gave
priority to their processors, Nigeria threw the sector open for all comers.
“That is why multinational companies come into the sector as they
like and even sometimes put a price on our cocoa. Also, there are
infrastructural challenges such as power and the recent bad roads leading to
the ports. Things get bad before they are shipped and the banks don’t care
about the situation, their interest continues to count on a monthly basis. If
you are supposed to ship a consignment in one month and it is taking you three
months, the banks will not care; they will keep charging interest every month
and bleeding the investors,”
one of the processors said.
The
Chief Executive Officer, Plantation
Industries Limited, a cocoa processing factory in Akure, Ondo State, Mr. Kunle Ayoade, told newsmen that
despite the fact that operators were not making profits, they had to contend
with paying fees to a countless number of regulatory agencies.
He
said, “There are too many regulatory agencies charging
several fees for the same service. Apart from National Agency for Food and Drug
Administration and Control, Standards Organisation of Nigeria, Ministry of
Labour and Productivity, state and federal produce inspection services, there
is the Weights and Measures Board whose service costs us N500,000 annually.
Last week, we paid N413,000 for two weight bridges. If we don’t pay, they will
lock our doors because they always come with police.
“In addition to the government agencies, the government also has
private consultants from the Ministry of Finance that collect 0.5 per cent of
whatever sale we make for a service they call Nigerian Export Supervision
Scheme.”
Ayoade
who gave his debt profile as N3bn told our correspondent that he was
contemplating shutting down due to the challenge of getting his products out of
the country. Among cocoa producing nations, Nigeria, which historically made
its earnings from cocoa in the 1970s, ranks fourth with a production of 220,000
tonnes as of 2016/2017. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
Cote d’ivoire is number one with 1,980 million tonnes per annum; followed by
Ghana with about 950,000 tonnes; Cameroon comes third with 240,000 tonnes. Also
in recent years, Nigeria’s production has been fluctuating between 195,000 and
220,000 tonnes.
There
had been a lot of promotion of the importance of the agriculture sector by the
government and cocoa was chosen as one of the strategic crops to focus on as
part of its economic diversification project.
The
Director-General, Lagos Chamber of Commerce, Mr. Muda Yusuf, noted that since the government had been
championing the campaign for local content and emphasising value addition for
the country’s exports, there was a need to rescue the critical sectors like
cocoa and others.
He
said, “The government has been talking about indigenous
participation in manufacturing. The government has also been talking about
backward integration and this is a very good example of an industry that is
fully into backward integration. (Punch)
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