Economic reforms initiated since the reinstatement
Palm oil owes its significance in the Nigerian scheme of things to several reasons. Besides conventional uses in food-processing, every part of the tree has economic value that can be employed in a variety of low-cost activities like roofing and wickerwork. Moreover, palm oil is a source of raw material for a whole range of industries; for instance, those involved in the manufacture of detergents, pomades, confectionary fat and margarine. By virtue of this alone it offers massive scope for employment generation and income distribution, to say nothing of other diversified products like palm kernel oil. The industry has therefore been widely regarded as a high-growth business by the private sector. In countries like Malaysia and Indonesia, which together account for 90% of current global exports, palm oil has proved to be a cornerstone of industrial growth.
For Nigeria, this dynamic crop represents an economic asset of incredible potential. It also represents huge opportunities for rapid SME development as a means to economic diversification, poverty alleviation and employment generation. The palm oil industry is unquestionably vital in Nigeria's plans for accelerated growth and the establishment of a sustainable and closely interdependent economy. Reinvigorating the industry can very well spark off the enterprise revolution that the country need to turn its fortunes around. Government intervention in this sector must hence be guided by a number of critical considerations:
* Maximising productivity in existing plantations so that scattered smallholdings can be converted into viable agricultural ecosystems.
* Minimising cost of production by developing high-yield varieties and improving efficiency in basic processing and refining activities.
* Creating effective backward and forward linkages for palm oil production and processing activities with focus on the larger domestic economy.
* Directing investment at marginal farmers and cooperatives that rely on wild groves or practice mixed farming on small plantations.
* Facilitating research and development, promoting public-private joint ventures and encouraging foreign investment with tax breaks and financial incentives.
* Revamping distribution and marketing networks to export-orientated standards; entering bilateral counter-trade agreements to avoid high tariffs and import restrictions.
* Ensuring compliance with international regulations on safety and quality of palm oil and processed products through wider use of technology.
* Implementing policies to address negative social development issues; for instance, promoting backward migration from urban areas to plantations.
In 2008, the United Nations Organisation for Industrial Development (UNIDO) launched a $5 million programme to boost sustainable production of palm oil in Nigeria and Cameroon. Although relatively small in terms of initial outlay, the project aims to train farmers on more efficient methods of production and processing. Conservative estimates by UNIDO say at least a thousand news jobs will be created by the end of the four-year project.
Considering the extent of its resources and human capital, Nigeria stands to reap much larger economic benefits from an optimally-expanded palm oil industry. Before that happens, however, the government must realise that where overdependence on fossil fuels caused most of Nigeria's woes, another kind of oil holds the cure!