The founder, managing director, and chief executive officer of Rainoil Limited have said Indonesia earns more money from the export of palm oil than Nigeria earns from crude oil annually.
He said this in an exclusive interview with The Alvin Report while making a case for Nigeria to look inward and change the narrative away from over-dependence on crude oil.
Citing agriculture as a huge opportunity to change that trajectory, he stressed that “Indonesia earns more from palm oil export than Nigeria from crude oil.”
For example, according to Statista, a U.S.-based statistics website, Indonesia earned $20.34 billion in 2017, $17.9 billion in 2018, $15.56 billion in 2019, and $18.45 billion in 2020 from palm oil export.
On the other hand, according to the Nigeria Extractive Industries Transparency Initiative (NEITI), Nigeria gets 35 percent of the sale of her crude oil and 65 percent goes to the international oil companies. In 2020, for example, Nigeria exported $48 billion worth of crude oil, 35 percent of which earned her $16.8 billion in revenue from crude oil.
He urged a rethink of the way the country does business, stressing, “We need to give attention to making the cake and remove our attention from sharing the cake. If we make a big cake nobody will bother much about having crude oil even if it’s there.”
Expressing confidence in a Nigeria with a bright future, the serial investor said he has fully developed 1,500 hectares of palm plantation in Delta State and is currently building an oil mill for the plantation.
He called on Nigerians to make long-term investments to grow the economy. He also expressed the need for the government to invest in infrastructure that encourages heavy-duty manufacturing and export, adding that Nigeria needs to invest more in ports.
He also called on the federal government to get the power sector up and running. He said once the energy sector is fixed, at least 40 percent of the unemployment crisis in the country will naturally vanish.
Commenting on the business environment of Nigeria, Ogbechie said he believes businesspeople need to learn how to run business in the environment they find themselves in and adapt to that environment, not always as things ought to be. He said there is no perfect situation as there will always be regulatory constraints in whatever business environment one finds himself in. He stated that business people need to define their boundary conditions and find the space in which to operate.
It may be recalled that at The Duke’s Economic Summit (virtual) held on April 24, 2020, one of the discussants, Dr. Tope Fasua, an economist, said “Nigeria is better off producing palm oil than crude oil.”
While that may have sounded queer to some people, palm oil is one veritable diversification potential Nigeria would do well to cultivate for herself as the price of crude oil on the international market remains unstable; and as the Indonesia experience proves.
Palm oil is not only used for cooking. It has several nutritional and industrial uses. Some of its nutritional uses include cooking oil, deep frying oils, margarine and spreads, bakery fats, cocoa butter alternatives, confectionery fats, ice-cream fats, infants nutrition fats, to name a few.
Some industrial uses of palm oil include cosmetics and personal care, soaps, candles, pharmaceuticals, lubricants and grease, surfactants, industrial chemicals, agrochemicals, coatings, paints and lacquers, electronics, leather, and bio-diesel.
There is no gainsaying the fact that Nigeria stands to gain much from this lucrative agricultural product, and indeed has the capacity to get its fair slice of the palm oil market internationally.
As a precedent, Nigeria has enjoyed a good share of the palm oil market before. According to the World Rain-forest Movement, oil palm is indigenous to the Nigerian coastal plain though it has migrated inland as a staple crop.
As of the early 1900s, Nigeria was producing all palm oil sold on the world market and it was considered a dominant source of foreign exchange. Up until the 1960s, Nigeria was the world’s largest producer of palm oil accounting for 43 percent of global palm oil production. Over-reliance on traditional production methods, excessive tapping of palm trees for palm wine, and the civil war (between 1967-1970) are factors that contributed to Nigeria’s inability to meet up with the global rise in demand for palm oil.
The Nigerian oil palm belt
The Nigerian oil palm belt covers twenty-four states, including all nine states of the Niger Delta (Akwa Ibom, Abia, Rivers, Edo, Imo, Ondo, Bayelsa, Cross River, and Delta). Within the oil palm belt in Nigeria, 80 percent of production comes from dispersed smallholders who harvest semi-wild plants and use manual processing techniques. Several million smallholders are spread over an estimated area ranging from 1.65 million hectares to 2.4 million hectares and to a maximum of 3 million hectares. The estimate for oil palm plantations in Nigeria ranges from 169,000 hectares (72,000 ha of estate plantations and 97,000 ha of smallholder plantations) to 360,000 hectares of plantations, according to a report titled: Palm Oil Value Chain Analysis in the Nigeria Delta.
Cultivation of oil palm
Cultivation of oil palm serves as a means of livelihood for many rural families and indeed the farming culture of millions of people in the country. The reference to oil palm as a crop of multiple values underscores its economic importance.
Palm oil production remains a major vocation in many communities. It involves hundreds of thousands of poor producers and tens of thousands of poor processors. It provides income for many farmers and their dependents. This connotes that an efficient and strong palm oil sector in Nigeria will enable the poor to be part of the solution to the poverty challenge through the provision of employment and a means of livelihood. There are numerous ways in which oil palm production could be deployed to boost employment opportunities for the people.
And to think of it, many think of only one product of the palm tree. Oil palm is made of essential components, namely: the fronds, the leaves, the trunk, and the roots which are used for several purposes ranging from palm oil, palm kernel oil, palm wine, broom, palm kernel cake, and many more.