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Published On: Thu, Nov 21st, 2019

Boosting the economy through vegetable oil industry

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By Kabiru Danladi Lawanti

Economic growth and prosperity are central to long-term poverty alleviation for social and environmental sustainability. The vegetable oil industry represents one of the most effective avenues for poverty alleviation, job creation and economic stability in Nigeria. The industry has the prospects of providing employment for millions of skilled and semi-skilled people. As demonstrated in other economies, with proper focus on production of commodities of large scale commercial values, improvement in the production of vegetable oil can effectively mitigate the poverty level in Nigeria and especially in northern Nigeria, which available statistics indicated is the poorest compared to other regions.
In 2006, there was an attempt by the National Assembly to look into the vegetable oil industry with a view to lift the nation forward in the area of economic reforms in agriculture. Although the proposed Bill initially was formulated as “Palm Oil Development Fund”, stakeholders in the industry, the Oil Seeds Processors Association of Nigeria (OSPAN) inclusive, raised concern on the contents of the proposed Bill which they described as narrow, therefore recommended a review of the Bill. OSPAN specifically called the attention of the members of the National Assembly to an all-encompassing programme under Presidential Initiatives called Vegetable Oil Development Programme. The committee’s outcome led to the inauguration of a presidential committee in 2003, saddled with the responsibility of formulating policies under the VODEP that are capable of increasing the production of vegetable oil in Nigeria. Part of the committee’s recommendations approved by the Council of States in March, 2003 were; sustenance of vegetable oil ban; exemption of vegetable oil from VAT among others.
However, the Bill was not signed into law and since then, little was heard about it. In the 1970s to 1980s the groundnuts oil mills were the main producers of oil and cake in the country and they formed the Groundnut Crushers Association (GCA), which has the sole objective of addressing the common challenges of its members. With time the GCA transformed into Oil Seeds Processors Association of Nigeria (OSPAN), this was to enable it, embrace all other soft-oil bearing seeds that are largely and naturally available in the northern part of Nigeria.
The economic downturn in the early and middle of 1980s led to the implementation of stabilization measures which included restriction on exports, which caused import dependency of most Nigerian manufacturing enterprises, which in turn resulted in operation of many companies below their installed capacity. This development led to the close down of many industries while the few ones that survived were forced to retrench a large proportion of their workforce. This continued throughout the 1990s. With the return to democracy in 1999, hopes were raised. Luckily for the country, there was an upsurge of oil prices in the global market. Sixteen years after, the country is back to ground zero, the oil prices crumbled and Nigeria is again faced with so many social and economic crises.
Some of the crises include rise in the level of poverty, shut down of many industries and businesses. Automatically this created job losses and its ripple effect were felt everywhere in the country. The crises in the labour market, and the menace it posed to Nigeria’s national security, led the APC government to mention in its manifesto that job creation is its major priority.
The government on coming on board sprang into action and specifically mentioned their intention to increase the number of small and medium-sized enterprises that produce new jobs, with industrial hubs focused on their creation and growth in all regions of the country. This is, in our opinion, an indication from the government that they have the will to address some of the inherent problems that crippled the nation’s economy. To do this, I think the government needs to look into the opportunities OSPAN and other vegetable oil processors offer, in terms of semi-skilled and skilled employment, the value chain of that industry.
Today, despite numerous challenges, OSPAN has been recognized in relevant government ministries like Agriculture, Industries, Commerce, NAFDAC, RMRDC, Customs Service, NEPC and some development financial institutions as well as the offices of key law makers of the National Assembly. This has made the organization to attract favourable policies from government. Affordable machineries from China and India have made OSPAN to operate in a conducive environment. On record, there were 41 oil mills scattered all over northern Nigeria and substantial number are also found in the south of the country. With an investment of N37 billion monthly and a turn-over of over N80 billion, the oil mill industries have the capacity to offer direct and indirect employment to over 4 million people.
One can see the zeal, enthusiasm and commitments of OSPAN members to continue production even though at very low capacity. They went through so many problems since their transformation from GCA to OSPAN. These changes range from lack of funds, registration formalities, accommodation and some policy somersaults, which forced it to go under in recent past. However, with over 50 well-established oil mills and over 150 small scale processors, all engaged in the processing and marketing of arable oil seeds, OSPAN is a force to reckon with as the industrial association for arable oil seeds processors.
Therefore any transformation of the country’s agricultural sector must be accompanied by consideration of the oilseeds scenario to ensure increase in the domestic production in the oilseed crops on a sustainable basis. This is what the vegetable oil processors need i.e. availability of raw material for processing. This consideration will also complete the value chain of the Oil processing industries. Increasing food availability including vegetable oil to eradicate poverty has been the pre-occupation of most developing countries where population increases far outweigh increase in agricultural production.

—Lawanti is a lecturer in the department of Mass Communication, ABU, Zaria.

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