Nigeria to save $50 million annually as CBN injects ₦25b in the cassava value chain

…Needs 12 years to completely eradicate importation of cassava derivatives

The injection of ₦25 billion by the Central Bank of Nigeria (CBN) into cassava value chain in order to curb annual spending of about $600 million (₦300 billion) on importation of cassava derivatives such as starch, glucose and sorbitol is a welcome development because it will save the country $49.98 million annually using the exchange of $500/naira.

MSMEsToday finding shows that the ₦25 billion injected by CBN into cassava vale chain accounts for 8.33% of the $600 (₦300 billion) annual spending on importation of cassava derivatives. This implies that the money spent on importation annually will reduce by 8.33% ($49.98 million) with the injection of ₦25 billion annually.

Cassava Infographic

If the CBN continues to inject the sum of the ₦25 billion annually into cassava value chain as planned, and all other things being equal including stability in policy of CBN itself, governance structures, and so on, in the next 12 years from now, importation of cassava derivative will become history in Nigeria. This implies that by the end of 2031, Nigeria would achieve self-sufficiency in the production of cassava and other derivatives and the country would have saved up to $600 million.

MSMEsToday foresees that the CBN plan became necessary considering the huge foreign exchange drain from the nations purse annually as a result of importation of cassava derivatives. With the injection of ₦25 billion into cassava value chain about 2 million jobs are expected to be created from this investment in five states, which include Kogi, Ebonyi, Cross Rivers, Ekiti and Ondo. Apart from the uptake in job creation, the investment is also expected to expand processing of cassava beyond garri and fufu, ensuring that cassava is used for pharmaceutical products amongst others.

This is also projected to affect cassava production in the country. Presently, globally production of cassava amounted to about 278million metric tons in 2018 out of which Africa’s share was put at about 61%. Nigeria being world leader in cassava production produced about 60 million metric tons, which is estimated to be about 20% of the total global production. Food and Agriculture Organisation of the United Nations (FAO) projects that by the year 2025; about 62% of global cassava production will be from sub-Saharan Africa.

Experts are agreed that with the injection of ₦25 billion into cassava value chain and if the fund is disbursed to real cassava farmers, cassava production will increase by more than the current 2% annual growth rate in line with FAO projection and in consideration of other factors that aid production. According to an agribusiness consultant, who preferred anonymity, he said, ‘ this won’t be the first time this type of fund would be provided for farmers in Nigeria, but, in our case, there is always the ‘Nigerian factor’. I recall a similar injection of ₦5 billion into the agriculture sector towards the end of Obasanjo’s administration and by the time I went with a client to access the fund, we were told that it was no longer available. And what happened was that the managers of the fund had called their friend and relatives who were not farmers and had given them the funds meant for farmers’. He therefore advised that cassava farmers should mobilise themselves as a group and move quickly to apply for the fund, even though I know there will be conditions, he concluded.

In Nigeria growth in cassava production has been primarily due to rapid population growth, large internal market demand, complemented by the availability of high yielding improved varieties of cassava, a relatively well developed market access infrastructure, the existence of improved processing technology and a well-organized internal market structure.

CBN’s ₦25 billion fund if well utilized should be able to close some of the gaps including potential demands in the cassava value chain such as demand for high quality cassava flour in bread, biscuits and snacks, which is above 500,000 tons annually with a supply side below 15,000 tons and a 300,000tons demand for starch with a supply side of below 10,000 tons only.

The strategic importance of the private sector, agricultural research institutes as part of CBN’s plan to re vitalize the cassava industry cannot be over emphasized, the apex bank should as a matter of importance collaborate with the private sector and state government in the cassava-producing states to ensure that investments are not wasted due to low yield varieties, poor farm practices and manual systems of farming, amongst others. This done, it is believed that the cassava value chain can be revived and the sub-sector can create more job opportunities for Nigerians.

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