The future of Nigeria’s cocoa industry hangs by the skin of its teeth, as grinders in the country contemplate closing down their factories at a time when Africa’s biggest economy has been hammered by a collapse in global oil prices, which has triggered a slide in its naira currency.
The rise in the cost of raw beans coupled with a sharp currency depreciation has made it unattractive for them to tap the export demand for butter.
The factories are on the brink of permanent closures which would lay off thousands of workers.
Nigerian economist, Bismarck Rewane says the falling naira is making it difficult for grinders to keep machines running even though a weak exchange rate is good for exporters.
“The equipment which they are using which are the grinders are imported equipment, the spare parts are imported and so if the value of the currency depreciates, they would need more Naira to buy the Dollars to buy those spare parts and that will affect the ability to grind cocoa into cocoa paste. But generally speaking, the lower the country’s currency, the more attractive its local commodities,” Rewane said.
Nigeria currently grows cocoa on less than a quarter of the 3 million hectares of land suitable to produce the beans.
The bulk of cocoa products are exported to Asia and Europe with only a small portion being consumed at home.