Currently Employs 500-700 Factory Workers, Yields $250m Yearly
Managing Director/CEO of the
African Cashew Alliance (ACA), Dr. Babafemi Oyewole, in this chat with GBENGA SALAU, spoke on the
potentials in the cashew sector of the agro allied industry in Nigeria and how
it could be one of the ways to diversify the economy.
Why do you think government should support the cashew initiative?
Current global market trends
show a growing demand for cashew. There is great potential and opportunity for
cashew-driven national economic growth, development, and employment creation,
as well as better income for rural farmers.
Under the Federal Government
of Nigeria’s “Transformation Agenda,” the government has committed to a policy
of economic diversification. To that effect, NEPC identified 13 National
Strategic Export Products, targeted at replacing crude oil. Cashew, as one of
the five identified strategic agro-industrial products, has, therefore, become
a priority of the Nigerian government.
The cashew industry currently
employs between 500-700,000 people, factory workers are about 2,000 formal and
1,000 informal. 90 per cent of those employed are women,
40-60 per cent are youth. The cashew sector has the potential to provide
livelihood and jobs for thousands more if adequate policies and programmes are in place to support its development in the
What are the definite supports that should be provided for cashew
farmers in Nigeria?
There is a need to address
current issues, including: High felling rate of old cashew trees without
replacement with new, higher yielding varieties; Inability to develop and fully
process cashew by-products (cashew apples for prunes, juice, wine, and pulp;
cashew nut shell liquid (CNSL) which can be used in the manufacturing of
paints, varnishes, resins and brake linings; and the shell used as processing
fuel); Subpar cashew peeling techniques, which lead to discounted prices on the
international market; The poor handling and export packaging responsible for
high rates of rejection of cashew exports. The government has been asked to
grant National Cashew Association of Nigeria (NCAN) a 100 percent duty waiver
on jute bags imports.
There is also a need to
address the issue of Poor quality cashew exports, leading to a significant loss
of export earnings. Raw Cashew Nut (RCN) are often denied access to
international markets due to lack of quality control and certification caused
by inadequate accreditation. The ACA Seal – an industry-accepted mark that
confirms compliance with internationally-recognized standards of quality, food
safety and social and labor standards – would increase market access for
Nigerian cashew processors if they are certified; Insufficient investment in
local cashew processing leading the exporting of over 90 per cent of the crop
as RCN. NCAN has urged the government to set aside $53million for a cashew
intervention fund to expand local cashew processing and the need for a more
transparent market and regulated prices for the crop, possibly through the
establishment of a National Cashew Marketing Board that will be responsible for
the regulation of the industry.
What is the potential contribution of cashew sector to Nigeria’s
The cashew sector currently
contributes approximately $250million to the Nigerian economy each year, with
over 300,000 families depending on cashews for their livelihood. The average
production growth during the last five years has been 11,300 MT/year and the
expected average production growth in the next five years is 13,500 MT/year –
one of the highest expected growth rates in Africa. Cashew export is the third
largest agricultural export foreign exchange earner for Nigeria. About $110
million was earned for cashew exports in 2013, representing about eight per
cent of all agricultural exports.
The potential revenue
generated by increased value added processing is tremendous. In 2002, a USAID
study estimated that an increase of 20 percent from Nigeria’s current
processing level would create more than 344,000 new jobs and additional income
of over $75million. Current estimates of these indicators would be much more higher today. Current consumption is low, but if just
20 per cent of Nigerians eat more cashews – they will consume all the cashews
produced in Africa. The market potential is huge. With more support, cashew
could be the number one cash crop in Nigeria soon and make the country a
leading producer in the continent and globally.
How could farmers better access finance to grow their business and
what role government could play in this?
The lack of adequate working
capital for farmers, local buying agents, exporters, and processors is
hampering the development of the industry. ACA has sought to assist in
increasing the bankability of cashew processors through linkages with financial
institutions. One way we are doing this is through the recent workshop where we
launched the “Linking Cashew Value Chain to Financial Institutions Initiative”.
Without access to the vital credit and working capital necessary to purchase
RCN, the long-term potentials of the African cashew processing industry would
not be realised.
institutions do not fully understand agricultural value chains, particularly
cashew. Poor finance intermediation by financial institutions has lead to
inadequate access to finance for farmers to rehabilitate and replant their ageing
farms. Mismatched expectations have created a need for greater mutual
understanding between the agricultural and banking sectors.
Greater access to finance is
critical to the strength and sustainability of a thriving cashew value chain.
Nigerian farmers need capital to ensure the long-term sustainability of their
trees and procure new varieties that will significantly improve yields.
Additionally, far too much of African cashew production is exported outside of
the continent. As cashew processing is a capital intensive and technology
sensitive industry, better access to finance and increased incentives for
investment is essential for local value addition through processing.
Processing of cashew would ensure the country and cashew
stakeholders enjoy the impact of the value chain in cashew, what policy
framework should be put in place by government to drive this?
ACA applauds the Cashew
Sector Development Strategy prepared by the Nigerian cashew stakeholders with
the support of the USAID NEXTT and NEPC. This strategy includes the following
holistic policy framework: Farm-Level Support: Quality support at the
farm-level is necessary, particularly to ensure the proper procedure for drying
and packing, which will ensure the highest quality and price, as farmer-processor-exporter
meetings help to clarify quality standards required.
Quality and Technical
Capacity Building: Provide capacity building for processing companies on food
safety, quality assurance and other technical issues through ACA Seal approval
and trainings; Market Development and Promotion: Provide linkages for exporters
with overseas markets through RCN buyer-supplier meetings, trade shows, and
strategic alliances with buyer associations.
Incentive support for the cashew industry through advocacy, best policy
practices, and a public-private sector working group and Market Information:
Trade information and statistic generation and production of relevant market
intelligence reports, including market information and statistical materials
for relevant stakeholders. ACA has been providing market information system to
its members and other stakeholders through its weekly and monthly market
reports to give a better understanding of the industry.
The current Investment
incentives are tax breaks from Nigerian Investment Promotion Centre; Export development
fund from NEPC and Export Expansion Grant under review. Yet, Nigerian
processors still struggle with many issues, including: the high average cost of
processing cashew owing to issues with electricity supply, high cost of diesel,
and costs of running generators, and inadequate tax rates, including multiple
taxation, low incentives for processing, and high rates on bank facilities. The
government should aim at strengthening existing cashew investment incentives
and create new policies that will deliberately reduce the cost of processing
and help attract more investment in the sector. Nigeria can learn a lot from
the experience of Cote d’Ivoire, the largest cashew producer in Africa, which
has recently undertaken far reaching reforms and incentives to promote the
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 RCN. NCAN is implementing a
program for rejuvenating cashew plantations and increasing the area of land
under cashew production in Nigeria, particularly as Nigerian cashew trees are
aging. It costs N10billion to plant 350 million new trees, which would yield
N100million and millions of new jobs. This could provide much needed jobs and