Friday, May 6, 2016

Getting Nigeria to become a global player in the $10bn shea industry

As the push for economic diversification intensifies, Chief Executive Officer of Nigerian Export Promotion Council (NEPC), Mr. Segun Awolowo, has suggested that Nigeria should leverage its nature-endowed comparative advantage in shea butter production and export to replace oil as major revenue earner.

Awolowo is seeking more focus on the non-oil export sector, particularly agric products such as Shea. This, he said, would lead to a surge in Nigeria’s Gross Domestic Product (GDP).

At a conference in Abuja, Awolowo said global demand for shea butter was estimated at $10 billion, with a projection of hitting $30 billion by 2020. He noted that if the product is fully harnessed and quality control and standardisation of processing addressed, Nigeria might take a chunk of the huge global market.

He said with 16 Shea producing states in Nigeria, the sector’s value addition to the economy in the form of inclusive and sustainable growth and wealth creation will be huge. He emphasised that if Nigeria becomes a competitive global player in shea production, it would give impetus to the current industrialisation push and lift millions out of poverty.

These are not empty claims. Nigeria literarily seats on a shea butter goldmine. At the last count, for instance, Nigeria produces 325,000 Metric Tonnes (MT) of shea nut, making her world’s largest shea nut producer, according to Food and Agriculture Organisation (FAO).

However, despite its capacity to earn foreign exchange, reduce poverty, empower women, and generate employ through the establishment of Small and Medium scale Enterprises (SMEs), Shea production and export, like many other agric products in the non-oil sector, remained neglected.

Why shea industry is rebounding

But a new thinking in favour of positioning Shea production and export to lead the renewed diversification drive may have taken centre stage. The Nation learnt that some developments both in the local and international scenes prompted hope of a possible rebound of the sector. One of them is the European Union (EU) directive that five per cent of shea must be added to all confectionaries particularly chocolate.

The fact that up to five per cent Shea content by weight is allowed under EU regulations in chocolate, other confectionaries and margarine, created a larger international market for shea products. And with wildly grown shea trees predominant in 21 states across the country, the belief is that Nigeria is on good stead to convert her comparative advantage in Shea product to competitive advantage.

The United State (U.S) government, through the United States Agency for International Development (USAID) has also stepped up its support for Nigeria’s Shea industry. USAID does this through the Global Shea Alliance, which includes leading retail brands, Shea butter manufacturers, research institutions, ministries, regulatory bodies, and Shea butter producers and exporters.

That is not all. The Nigeria Investment Promotion Commission (NIPC) has also indicated its readiness to partner the USAID/Nigeria Expanded Trade and Transport (NEXTT) project and Technoserve to facilitate investments in Shea clusters. The essence of the partnership was to provide necessary processing facilities to the shea clusters spread across the 19 states where the shea trees are predominant.

On the local scene, Shea butter, The Nation learnt, will feature prominently as one of the products for the Africa Growth and Opportunity Act (AGOA) initiative by the US government. AGOA, which allows import of agricultural commodities from eligible African countries including Nigeria to the US duty free, was recently extended by 10 years.

The trade policy was supposed to have expired on September 30, last yaer, but the US Congress extended it for an additional 10 years until September 30, 2025. With the 10-year extension – the longest in the programme’s history – Shea butter is said to be one of the products Nigeria hopes to push to the US market.

Perhaps more importantly, shea butter is one of the products that has been selected for the NEPC One-State-One-Product (OSOP) initiative, which seeks to develop one exportable product per state by leveraging on the area’s comparative advantage.

Private sector operators to the rescue

Apparently encouraged by the increased local and international focus on Shea production and export, PZ Cussons Foundation, last week, boosted the sector by formally handing over the PZ Nasara Shea-Butter processing facility to a women co-operative group in Tungan Wawa in Kontagora Local Government Area of Niger State.

The facility consists of raw material store, structures for drying, roasting, blending, finished goods store, borehole and other equipment and machineries. According to the Foundation’s Trustee and former First Lady of Nigeria, Justice Fati Lami Abubakar, the project, executed by the Foundation, was an intervention to empower women economically through encouragement of rural enterprise.

She explained that the new facility will help upgrade their traditional method of production and make them internationally competitive. It will also bring local processors under one umbrella and organise them into a more formal structure as enterprise.

Niger State governor, Alhaji Abubakar Sani Bello commended the Board of Trustee of the Foundation for sitting the project in the state. He said it will support government’s effort at diversifying the state’s economy by enhancing productivity in agro allied endeavours at rural levels, help in poverty eradication and employment.

The governor, who promised to encourage other corporate bodies to do the same, had earlier unfolded plans to distribute new improved shea seedlings to encourage more cultivation. The state government has also intensified efforts at sensitising private sector players and other development partners to awaken rural populace, especially women to tap into the huge potential in Shea production.

For Director-General, Niger State Commodity and Export Promotion Agency, Mohammed Kontagora, the development of large-scale production of Shea butter in Nigeria would put Nigeria on the right path to diversifying the economy through strategic focus on the commodity’s export business.

Kontagora, a member of Global Shea Alliance (GSA), said Nigeria, which presently accounts for 57 per cent of the global Shea market, could address its challenge of poverty through Shea butter export. “Nigeria stands a better chance of improving its economy through the processing and sale of Shea butter,” he said.

He said one way to improve economies of communities is to take comparative advantage in Shea butter production by promoting Shea butter as a food and cosmetic product, noting that EU’s directive that five per cent of Shea must be added to all confectionaries particularly chocolate in the zone could effectively upscale the profile of the commodity’s business.

“Shea butter has the potential to eradicate poverty. This is the sector I believe we all have to go back to,” the DG said. The Chief Executive Officer (CEO), Shea Origin Nigeria project, Mrs. Mobola Sagoe, has already done that. The Lagos-based entrepreneur has since carved a niche in the business of promoting beauty products. She has even gone a notch higher by assisting women get involved in shea butter production.

Sagoe has been smiling to the bank by supplying cosmetics and export Shea butter to the United Kingdom (UK) and the U.S. The professional esthetician (skin care therapist), with 28 years’ experience, said the use of shea butter has been increasing in recent years as consumers are demanding better quality natural, minimally processed ingredients in personal care items and food.

The budding entrepreneur said internationally, 90 per cent of Shea nuts are used in the food and confectionary industry for the production of cocoa butter equivalents or to improve confectionaries and margarines. She identified continued rising demand for cocoa butter equivalents (CBEs) due to rising world consumption of chocolate, high prices for cocoa, and strong demand for natural cosmetics and soaps as principal factors driving the demand for Shea.

Sagoe said Nigeria is a leading producer of shea nut. This must be why, as part of her commitment to promoting a sustainable shea industry, she commenced the implementation of a pilot project to help women gather the Shea nuts and process them into butter. She has since taken over the shea processing centre in Saki, Oyo State to train villagers, mostly women, on how to pick and process Shea nuts and make a living from them.

Sagoe is being supported by USAID Nigeria Expanded Trade and Transport Programme (NEXTT). The entrepreneur, whose firm strives to lift women and their families out of extreme poverty through improved Shea production, said an investment of about N50, 000, prospective entrepreneurs could venture into nuts gathering for big merchants.

She said she intends to ensure that companies source products directly from producers in the villages, where villagers are involved through manually collecting, sorting, crushing, roasting, grinding, and separating the oils from the butter and shaping the finished product.

The raw nuts collected from them are processed into unrefined Shea butter. The villages also make money by selling the raw nuts to companies that extract, refine and export the oil abroad for cosmetic purposes.

Apparently in recognition of her exploits, Sagoe’s firm has been selected as global supply partners for Shea Radiance, an international organisation that supplies communities with locally fabricated equipment to help increase production output, relieve physical labour on production and provide a consistent and improved quality of Shea butter.

Shea origin centres on a community-based cooperative and seeks to improve the livelihoods of women Shea nut producers by offering training, greater ownership within the supply chain and access to improved technology.

However, the consensus of experts is that the success or otherwise of the current public-private sector collaboration and involvement in positioning shea butter production and export business to drive the ongoing economic diversification agenda depends largely on how far government encourages and sustains the initiative through deliberate policies, provision of necessary infrastructure and enabling environment.


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