Naira scarcity threatens Nigeria’s cocoa exports

The cocoa industry in Nigeria is facing significant challenges as the lingering naira scarcity is impacting farmers, exporters, and the overall value chain. Akin Laoye, CEO of FTN Cocoa, recently discussed the implications of this crisis in an interview with CNBC Africa. The shortage of cash in the market has disrupted cocoa deliveries, as smallholder farmers depend on cash transactions. This has led to a situation where farmers are unable to sell their produce, resulting in a potential decline in supply. The Cocoa Association of Nigeria estimates that up to 27,000 tons of cocoa could be affected by the ongoing crisis. The naira scarcity has also caused distortions in local cocoa pricing, with prices in Nigeria surpassing terminal prices due to factors such as inflation, fuel scarcity, and exchange rate fluctuations. The lack of a living income differential system, which is present in countries like Ghana and Cote d'Ivoire, further hinders Nigeria's competitiveness in the cocoa market. Laoye emphasized the need for Nigeria to collaborate with its peers to enhance its industry's competitiveness. He highlighted the importance of government policies and efficient management to address the current challenges. Looking ahead, Laoye expressed optimism that a resolution to the naira scarcity issue could mitigate the impact on the cocoa sector in the coming months. He called for the incoming administration to focus on engaging stakeholders, improving access to funding, agricultural extension services, and enhancing port infrastructure to support the industry's growth. Laoye also stressed the need for affordable funding, reliable power supply, and streamlined import processes to empower African processors in the cocoa sector. Despite the existing barriers, he believes that creating an enabling environment will attract more entrepreneurs and drive growth in the cocoa processing segment. As the industry grapples with the current challenges, stakeholders are hopeful that concerted efforts and strategic interventions will sustain Nigeria's position in the global cocoa market.