Bags of Cocoa Beans for Export Photo: ConnectNigeria

Exporters lament tonnes of cocoa beans trapped at Nigerian ports over fresh regulation

Alexander Davis | ConsumerConnect

The Federal Government’s efforts at improving its Foreign Exchange (Forex) earnings, following dwindling crude prices in the international oil market may be frustrated by the reported delays in exports of cocoa beans, cashew nuts, and related agricultural produce after all.

Pius Ayodele, President of Cocoa Exporters Association of Nigeria, said about 100,000 tons of cocoa beans are trapped at the ports and another 100,000 tonnes of a variety of agricultural commodities are in warehouses around the country, Bloomberg report said.

Ayodele disclosed that the process now takes an average of 40 days, instead of seven to get approvals to clear a container for shipping overseas.

Nigeria is the world’s the world’s fifth-biggest producer of cocoa beans, a key ingredient in chocolate.

Recall that as Africa’s largest economy also fell into a recession last quarter 2020.

That’s after the Central Bank of Nigeria (CBN) started insisting on additional documentation to ensure export proceeds are returned to the country, stated the report.

Cocoa Pods and Beans

The documentation process involves Nigerian Export Proceed (NXP) numbers, Form NXP, which is a mandatory document to be completed by all exporters through authorised dealer bank for shipment of goods outside Nigeria irrespective of the value and whether or not payment is involved.

Any customer willing to engage in export business is required to register with the Nigeria Export Promotion Council (NEPC).

The CBN regulations state the basic documentary requirements for an export transaction include a duty completed Form NXP, a Proforma Invoice, a Sales Contract/ Agreement, where applicable, NEPC Registration Certificate, relevant Certificate of Quality as issued by one or more of the agencies stated in 1(d)(1)Shipping documents e.g. Bill of Exit, Bill of Lading, etc., and other certificates, e.g. Form EUR-1.

However, in a recent virtual meeting with representatives of some shipping lines, the Mr. Godwin Emefiele, Governor of CBN, indicated that it had been discovered that many shipping companies do not comply with the Federal Government’s directives that such shipments carry NXP number.

The oil-price plunge is having a biting effect on dollar availability in the country.

While crude contributes less than 10% to Nigeria’s gross domestic product, it accounts for about 90% of foreign-exchange earnings and half of government revenue.

The shortage of hard currency is also adding to the gap between the official exchange rate and that on the parallel market.

Report added that now more than 20 percent has created an incentive for exporters to divert dollar proceeds to unofficial channels.

Tola Faseru, President of the National Cashew Association of Nigeria, was quoted to have said that the slowdown in trade flows since October 2020 has caused a loss exceeding 500 billion naira ($1.3 billion) in non-oil revenue for Nigerian exporters.

He revealed that some traders have cash-flow problems and default on loans due to the gridlock at the exporters association.

And while it’s a struggle to get shipments out of the country, the 2020-21 cocoa crop in world’s fifth-largest producer of the chocolate ingredient could exceed initial estimates by as much as 27% to reach 270,000 tonnes.

Reduced production by global chocolate manufacturers adds to their problems.

Meanwhile, Mufutau Abolarinwa, President of the Cocoa Association of Nigeria, said the local cocoa sellers are struggling to find buyers willing to enter into new forward contracts because many factories have shut operations because of the pandemic.

Abolarinwa stated that international buyers are complaining of heavy stockpiles of unsold beans.

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