CBN plans single-digit interest loan for oil palm producers

The Central Bank of Nigeria on Monday unveiled fresh plans to revive the palm oil value chain to enable the sector to generate foreign exchange and reduce the level of unemployment in the country.


The CBN Governor, Mr Godwin Emefiele,  unveiled the strategies while speaking during a meeting with stakeholders in the Palm Oil Value Chain.

The meeting, which was held at the headquarters of the CBN, was attended by Governors of Akwa Ibom, Edo and Abia states and chief executives of companies operating in that sector of the economy.

Emefiele said as part of the apex bank’s Anchor Borrowers Programme and its Commercial Agriculture Credit Scheme, the CBN would work with large corporate stakeholders and smallholder farmers to ensure availability of quality seeds for this year’s planting season and agro-chemicals in order to enable improved cultivation of palm oil.

In addition, he said the bank would also work to encourage viable off-taker agreements between farmers and large-scale palm producing companies.

He noted that loans would be granted through the ABP and CACS programmes at no more than nine per cent per annum to identified core borrowers.


With an estimated three million hectares of land under cultivation and abundance of suitable arable land, the CBN governor said the bank would need the cooperation of state governments in the oil palm producing zone.

He said their cooperation would make land available to investors with proven financial and technical capabilities, who will be able to support developments of large scale palm oil plantations in the country.

He announced that all the states in the South-South and South-East regions had agreed to provide at least 100,000 hectares for the initiative.

The programme, he stated, was also expected to accommodate the smallholder farmers.

He said, “This renewed focus by the CBN to support improved growth in the agriculture and manufacturing sectors in Nigeria, is clearly in line with the Federal Government’s determination to diversify the base of Nigeria’s economy away from a reliance on crude oil, so as to insulate our economy from the vagaries and shocks associated with volatility in crude oil prices


“Let me stress that we are not unmindful that our current focus to make life difficult for smugglers of the products being targeted under our intervention will be resisted by unpatriotic and recalcitrant beneficiaries of the status quo.

“We will not be deterred by their criticisms but will appeal to Nigerians to support these initiatives.

“No doubt, there will be initial pain caused by this new focus, but the medium and long run benefits remain unassailable and glorious for our dear country.”

Emefiele said that resuscitating the country’s palm oil sector was vital to the government’s growth objectives as it would assist in creating jobs for Nigerians.

He said the meeting was an important one as it brought together key players across the palm oil value chain, state governments, banks, and officials of the CBN, in order to examine the challenges faced by palm oil operators.


He said the need to meet the stakeholders in the sector was borne out of the conviction that revitalising the sector would enable Nigeria to regain its position as one of the leading global producers of palm oil.

He said currently, Nigeria still expended close to $500m on oil palm importation annually, adding that time had come to change the narrative.

He said the apex bank would support improved production of palm oil to meet not only the domestic needs of the market but to also increase exports in order to improve forex earnings.

He said, “As some of you may recall, in the late ’50s and ’60s, Nigeria was not only the world’s leading producer of palm oil, it was also the largest exporter of palm oil, with close to 40 per cent of the global market share.

“Today, we are a distant fifth among leading producers of palm oil; we barely produce up to three per cent of the global supply of palm oil, with an estimated production of 800,000 metric tonnes of palm oil, while countries like Malaysia and Indonesia produce 25 million and 41 million tonnes of palm oil respectively.”


“We have also become a net importer of palm oil, importing between 400,000 – 600,000 MT of palm oil in order to meet local demand for this commodity.

“Despite the availability of over three million hectares of farmland for palm oil cultivation, production remains low at close to two tonnes per hectare, relative to a global benchmark of 25 tonnes per hectare.

“This is as a result of the maturation of existing palm trees, as some of these trees were planted in the ’50s, as well as low investment in replanting high yielding palm oil seeds. As some of you may know, the usual lifecycle for optimum palm production is 25 years.”

The CBN governor said if Nigeria had kept pace with its peers in supporting improved cultivation of palm oil, at the current global market price of $600 per tonne, and an assumed production level of 16m tonnes, Nigeria could have generated close to $10bn worth of foreign exchange.

This analysis, he noted, did not take into consideration the number of jobs that could have been created in rural communities from large scale smallholder developments.


In due course, the CBN governor said the bank intended to also address challenges in the cocoa, cassava, beef/cattle ranching, dairy and fish sectors.

He said soon, every region of the country would feel the positive impact of the CBN intervention in the agricultural sector.

These efforts, he stated, would not only enable the bank to conserve foreign exchange, but also create jobs on a mass scale.

He expressed optimism that as the measures began to bear fruits,  states would become more economically viable, given the massive economic activities that would occur from catalysing activities in the agricultural and manufacturing sectors.

He said, “Today’s meeting was enlarged to include Executive Governors and other top government functionaries from the oil palm producing states 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 3-5 years, the global share of the country’s oil palm production would more than double.


“Our ultimate vision is to overtake Thailand and Columbia to become the third largest producer over the next few years.”

The Governor of Edo State, Godwin Obaseki, said that there were a lot of factors that were making the country uncompetitive in oil palm production.

He said for the intervention of the CBN to achieve the needed results, there was a  need to have a very clear plan that would provide the right infrastructure for the land to be given out by governors.

He also said there was a need to determine where to get the planting materials that would serve as input for oil palm farmers.

He added that the issue of farming practices and training of smallholder farmers must also be considered, noting that to attract any meaningful investment, there must be some form of incentives to attract investors.

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