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  • ‘Explore cashew as revenue spinner’

    Oct 16th, 2016

    The Managing Director/CEO, African Cashew Alliance (ACA), Dr. Babafemi Oyewole, in this interview with DANIEL ESSIET, says investment in cashew farming can help Nigeria in its diversification efforts from a mono product economy. Cashew, he explains, has high prospects of attracting foreign direct investments if the right things are done.

    What, in your view, are some of the most pressing economic issues facing Africa?

    In my view, some of the most pressing economic issues facing Africa at the moment include overcoming the infrastructural deficits that have negatively impacted on the development of the private sector. There is the need to diversify African economies from dependence on natural resources that have low development impact in terms of employment generation, and in relation to the development of the vast and neglected agricultural resources that can provide jobs for the teeming young people in Africa.

    In 2015, Africa’s youth accounted for 19 per cent of global youth population; the number of youths in Africa is estimated to increase by 42 per cent by 2030. The economic problems of the inability to provide jobs for these youths in Africa will be unimaginable and investment in agriculture and agro-based industrialisation will be the most urgent option to engage the youths in profitable economic activities that will enhance the development of Africa.

    Current global trends in agriculture point to a shift towards creativity and innovation. Why is this of great importance?

    Creativity and innovation have become indispensable in agriculture because of the recent challenges of feeding the over 1.2 and 7 billion people that are estimated to be currently living in Africa and the in the World. Conventional approaches to agriculture based on outdated agricultural practices and equipment will not be able to guarantee food security for the growing population. This is the reason substantial amount of resources are devoted to agricultural research in the developed world to innovate new and improved varieties of seedlings that can increase yield per hectare within a very short period of time. Another dimension to this is the issue of climate change affecting the growing of some agricultural products in their traditional environment. To combat the negative effects of climate change on agricultural production and by extension, global food security, there is the need to adopt creative and innovative agricultural practices and equipment.

    What kind of agribusiness activities can be most profitable and beneficial to Africans?

    Africa is naturally endowed with agricultural resources and in fact, the comparative advantage of Africa lies in this endowment. Since the adoption of the policy of liberalisation of economic activities by most African countries, the agricultural sector has been opened to private sector investment. There is no agribusiness activity that will not be profitable and beneficial to the people of Africa. What governments in Africa need to do is to create the enabling environment for the private sector through appropriate fiscal incentives, policies, access to finance and supporting infrastructure. Africans are very enterprising people if they get the needed support and this has been proven in some economic sectors such as telecommunications. If the government provides the necessary enabling environment and reduce the cost of doing business, the private sector will respond by investing in profitable agribusiness projects in Africa.

    What do you see as the role for Western-based agribusinesses in Africa?

    Africa can learn a lot from the Western-based agribusiness model, which is to run agriculture as a business enterprise. This is because, agriculture in Africa has not been developed or seen as a business activity and this explains why the educated elite are shying from going into it. Agriculture is still largely practiced for subsistence living and this explains the large scale poverty in agricultural communities in Africa. This is also where the government has a lot to do in sensitising the population, particularly the youth, that they can become millionaires and billionaires if they engage in agribusiness. However, given that Africa has a large population, mechanisation of agribusiness will have to be gradual. This is what we are seeing in the cashew industry where labour is still being employed for shelling and peeling of cashew nut.

    Is the cashew industry open to foreign direct investment and/or partnerships between local and foreign companies in its agribusi-ness market?

    Like any other industry, the cashew industry is open to foreign direct investment and partnerships between local and foreign companies. Due to the enormous opportunities in the cashew industry in Africa, a lot of foreign investors have partnered local entrepreneurs to set up plantations and processing factories that are adding value to the crop in the continent. Cashew processing, for example, is a capital and technology intensive business that are often beyond most local investors, foreign investment has complemented local investors in the industry. Actually, the modest improvement in cashew processing in Africa from three prer cent in 2006 to about 15 per cent in 2015 has been made possible by foreign investors such as Olam, Fludor, etc, with cashew processing factories in countries, such as Cote d’Ivoire, Nigeria and Benin Republic.

    It has been argued that banks needed to look beyond conventional sources of financing and risks of lending to agriculture, including developing new and more appropriate public and private sector financial products. What is your take on this?

    I tend to agree with such views, but the main issue in financing agriculture in Africa are the risks involved, given that it has not yet evolved into agribusiness as being practiced in the developed world. Moreover, financial institutions in Africa do not fully understand the whole agricultural value chain and therefore, are not able to develop financial products that are tailored and appropriate to the various segments of the value chain. Agribusinesses are sometimes a long term investment, which commercial banks may not be able to support without adequate guarantee, in view of regulatory requirements and the nature of their resources. To support commercial banks, agricultural insurance and government incentives are very critical and indispensable.

    How is the thinking of the African Cashew Alliance (ACA) evolving with regards to the role of smallholder farmers?

    Actually, the African Cashew Alliance (ACA) started with the vision of creating a globally sustainable cashew industry from farmer to consumer. Therefore, ACA has always recognised the strategic role of the smallholder farmers in the development of the cashew industry by providing technical assistance and information services tailored to their needs. The Alliance is implementing projects that are linking the smallholder farmers with processing factories in Africa to ensure improved pricing and income for the farmers. The importance of the smallholder farmers can be seen in the fact that two million African farmers grow about 48 per cent of the world’s cashews and through the contributions of the ACA, African smallholder farmers have more than double production. The support of the ACA projects and technical assistance has contributed to increasing the income of the smallholder farmers in the cashew sector in Africa.

    What is your impression about Nigeria’s cashew industry from the perspective of a CEO of the biggest cashew alliance on the continent?

    Nigeria’s cashew industry is witnessing concerted efforts by all the stakeholders to increase production and processing in the country. With an estimated yearly output of 170,000 metric tonnes, Nigeria is the third largest producer of cashew in Africa and the fifth in the World. This shows that the country is a key player in the African and global cashew industry. However, with only 20 per cent of available land under cultivation, there are still vast, unexploited opportunities to match the production of Cote d’Ivoire, which produces 700,000 metric tonnes and is the largest producer in Africa and the world. This is why I am very excited that cashew is one of the 13 strategic crops that the government has identified to diversify the economy of Nigeria from oil. Taking advantage of the renewed government interest in cashew, the National Cashew Association of Nigeria (NCAN) is implementing a programme for the rejuvenation of cashew plantations and increasing the area of land under cashew production. This programme is being actively supported by the Nigerian Export Promotion Council (NEPC), a member of the Advisory Board of the ACA. If the current efforts are sustained and the strategies implemented, within the next few years Nigeria can become the world’s largest producer of cashew with enormous opportunities for job creation and foreign exchange earnings.

    How important is it to tap into the cashew industry?

    My experience representing Nigeria as the Executive Director/CEO of the African Petroleum Producers Association Fund for Technical Cooperation for six years has been very tremendous and useful in this present assignment. Nigeria is a member of the African Cashew Alliance and the country also produces one of the two Vice Presidents of the Alliance. My assignment is important for Nigeria because it gives visibility to the country in the continental and global cashew industry. It will also enable me to provide the necessary support to the efforts of the Nigerian government at promoting the cashew industry and engage all cashew stakeholders in the country for the development of the industry.

    What do you think are ACA’s greatest impacts on the industry?

    The ACA was established in 2006 as an association of African and international businesses with a vision of promoting a globally competitive African cashew industry that benefits all the value chain from farmer to consumer. Its objectives are to increase processing within Africa, improve competitiveness and sustainability of the African cashew industry and facilitate public-private cooperation for the development of the industry.

    To achieve the objectives, ACA provides technical assistance and facilitates investments, promote market linkages and international standards through information sharing and best practices. Today, nearly 130 member companies in about 30 countries, 17 of which are in Africa, work under the ACA banner and represent all aspects of the cashew value chain, including producers, processors, traders and international buyers. Over the last 10 years, ACA’s commitment to its mission has led to significant achievements with over 27,000 jobs supported, 18 processing factories certified through the ACA Quality and Sustainability Seal, over $1.2 million new investment facilitated, technical support given to over 22 companies and about $100 million of kernel exports facilitated.

    ACA has also contributed to the quadrupling of cashew processing in Africa from 35,000 metric tonnes in 2006 to over 140,000 metric tonnes in 2015, representing 300 per cent increase. Furthermore, the Alliance has contributed to the organisation of the sector in the producing countries and created the awareness of the economic value of cashew through advocacy for the support of the cashew industry.

    Which organisations have you partnered in your work to grow the industry?

    The Alliance has been partnering the United States Agency for International Development (USAID), which has been providing funding and technical support for some of the projects we are currently implementing. We are also in partnership with Wal-Mart, a large American Supermarket chain for the implementation of projects in some of the producing countries. The African Development Bank is also supporting with the implementation of our projects.

    Our international members and partners have also been working with us to support the development of the industry. We continue to explore new partnership opportunities in our efforts to increase the volume of production and processing in Africa.

    Challenges abound in Africa’s farming. What do you think are the key challenges that face the agric industry?

    The key challenges include low productivity of farming in Africa which is a product of low technology and skills in the sector. Other challenges include access to finance, poor post-harvest handling of agricultural products, lack of storage and processing facilities, poor sector organisation and inadequate support from the government through incentives and enabling environment. These are some of the challenges that account for the low level of value addition to agricultural commodities in Africa. Most countries in Africa are working with technical implementing partners like the ACA to overcome these challenges and thereby, increase the interest of the population in Africa’s farming.

    How do you think some of these challenges can be sorted out? Are there some policy issues you think Government can rectify?

    The government will need to play a very important role in mitigating the effects of these various challenges. Agricultural activities are usually supported by the government all over the world through incentives that will encourage private sector participation. Government should not go into agribusiness on its own but provide enabling incentives to the private sector to do so. As I mentioned earlier, with current dwindling revenues from commodity exports, most governments in Africa are now focusing attention on the development of Agribusiness. For the cashew industry, producing countries are implementing policy reforms and targeted incentives that will increase production and local processing for value addition. Some countries are developing national cashew development strategies to promote the crop and take advantage of the enormous opportunities for the diversification of their economies, earn foreign exchange and create employment for the teeming young populations.

    Does Nigeria have the potential to be the highest supplier of cashew in the world and how can that be achieved?

    Yes – Africa grows approximately 57 per cent of the world’s cashew and Nigeria is the third largest producer in Africa with an estimated output of about 170,000 MT annually. A 2001 survey of cashew producing areas in Nigeria revealed that less than 20 per cent of available lands are under cultivation. By increasing land area with high yielding and good quality cashew trees, Nigeria has the potential to become the world’s largest producer of raw cashew nuts (RCN). NCAN is implementing a programme for rejuvenating cashew plantations and increasing the area of land under cashew production in Nigeria, particularly as Nigerian cashew trees are aging.

    Processors are struggling to procure RCN and the government should actively support their efforts through potential tax/export policies and increased access to finance – but also, Nigeria should look to long-term strategies to increase production so that all RCN demand is met (both foreign and domestic).

    In conclusion, as Nigeria seeks to diversify its economy away from the mono product of petroleum, cashew production and processing offers one of the opportunities to earn the much needed foreign exchange and government revenues to support economic and social development in the country. This is particularly given the strong current and projected global demand for cashew and the vast opportunities for the consumption of the product in Nigeria and Africa. Therefore, the Nigerian government should sustain the current efforts to increase the production and processing of cashew in the country. The African Cashew Alliance is well positioned and adequately prepared to provide the technical and business support that is needed to enable Nigeria achieve all the objectives outlined in the National Cashew Development Strategy document

    What’s your vision for the future?

    My vision is to see Africa take its rightful position as the ‘food basket’ of the world by taking advantage of its vast agricultural resources. This will enable the continent be self sufficient in food production, guarantee food security to its population and become a net exporter of agricultural products to the rest of the world. For the African Cashew Alliance, my vision is to see Africa sustain its first position as the largest cashew producer in the world, increase cashew processing in Africa to 60% over the next ten years, increase Africa’s cashew consumption to 15% during the same period and develop an effective intra-regional cashew market. In sum, I will like the vision of the founding fathers of the ACA to promote a globally competitive African cashew industry that benefits the whole value chain materialise. ACA is determined and well positioned to support this vision through sustained provision of technical assistance, investment facilitation, market linkages, international standards, best practices and public-private partnership for the development of the African cashew industry.