COCOA Processors Association of Nigeria (COPAN) has urged the Federal Government to provide working capital from the dedicated agricultural Fund, to oil the operations of cocoa processing factories around the country.
This, Chairman of the association, Mr. Akin Olusuyi, said would enable the sector finance capital-intensive projects to move the industry forward.
Speaking at a media briefing in Lagos at the weekend, Olusuyi stated that the sector had depended on high interest loans from banks to survive.
He said most of the investments that flowed into the cocoa processing sector came as a result of the export incentive called the Export Expansion Grant (EEG) which was introduced by the President Olusegun Obasanjo administration to boost Nigeria's non-oil export.
According to him, the EEG, which was supposed to pay Nigerian companies that export non-oil products about 30 per cent of the value of their export in the form of tariff and duty waivers has been irregular.
Olusuyi called for immediate payment of outstanding EEG for 2008, and prompt submission and payment of 2009 EEG.
He also canvassed upward review of the EEG grants levels for cocoa processing factories to compensate for the non EPA impact and high power costs.
He added: "There is need for government to removal of EEG grant on the export of raw cocoa beans. Consideration should be given to the concept of only allowing export of raw cocoa beans by cocoa beans by cocoa processing factories, thus helping to ensure adequate supply of cocoa to all plants. Factory cocoa beans export licences could be granted based upon the individual factory size, in relation to the overall cocoa crop availability".
He also emphasised the need for the government to enforce the duty free status of imports of spare parts and machinery by cocoa processing plants, and refund of all duties paid during the sector development of the last five years, explaining that some other problems plaguing the industry had driven the sector's capacity to an abysmally low level.
"The problems we face have remained unsolved," Olusuyi said, adding that "the power problem is still there, penalties are still being imposed on our products in the international market particularly in the European Union (EU) nations and statutory incentives designed to support the industry have remained elusive."
He stressed that the companies that are managing to operate at the present low capacity are doing so with serious loss to their businesses.
According to him, all the operators sourced loans from banks using projections that seriously factored in the Federal Government incentives such as the EEG, which he said, had not been received by operators for the past three years.
"How do we then fulfill our obligations to the financial institutions that gave us credit?" he asked.
He said it is disheartening that Nigeria, which had short changed its manufacturers and industrialists by failing to provide appropriate infrastructure, had failed to announce a rescue package for its companies, a step which developed economies are already taking.
He expressed doubt about the recovery of the sector unless the Federal Government takes firm steps to reverse the scary trend in the sector.
Amid the woes which cocoa processors face, Olusuyi said EU has sustained its penalty on processed cocoa being imported to its member countries from Nigeria.
For failing to assent to the interim Economic Partnership Agreement (EPA) being proposed by the EU to the African Caribbean and Pacific (ACP) countries, processed agricultural produce being exported from Nigeria to the EU attracts an extra cost of a minimum of six per cent of the total value of products being exported.
He said that similar products being exported from countries such as Ghana, Cote d'Ivoire and others who have endorsed the temporary EPA do not attract this extra cost, therefore putting Nigerian products at a major cost disadvantage in the export of processed products to the EU.
According to Olusuyi, "the response of the Federal Government to our plight has been a bit cold, no action has been taken by government to save the sector from failure."
He said most cocoa processors were just maintaining low level production because of the banks' credit facilities to kick start their operations and to meet their obligations to the banks.
Source:© Copyright Guardian Online
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