Nigeria cocoa exporters reveal issues over currency shortage impacting the sector
Further turbulence within Africa’s cocoa sector has been revealed, as Nigeria’s export markets become the latest to become unsettled, with reports of a shortfall in cash to pay labourers and logistics staff, writes Neill Barston.
As noted by the Bloomberg news organisation, the country stated in October last year that it was set to redesign 200, 500 and 1,000 naira notes as it sought to rebalance the economy and tackle inflation issues.
Consequently, $4.6 billion has reportedly been returned to banks in Nigeria, which has had a knock-on effect of a lack of currency in circulation to pay labourers, with the cocoa sector remaining cash dominated.
According to regional reports, Mufutau Abolarinwa, the president of the Cocoa Association of Nigeria said the country ‘does not have a quantum of new notes now to pay for all the services like grading fees, handling charges and freight, all of which are usually paid for in cash,” with reports of the country being unable to ship as much as 30,000 tonnes as a result of the financial situation.
Notably, it was also observed, that the issues over present export levels may impact on planting of future crops, with landowners being unable to pay farmers due to a shortage of available currency.
The difficulties experienced in the country follow in the wake of issues within Ivory Coast, which together with neighbouring Ghana, accounts for two thirds of the cocoa market destined for the confectionery sector. But as recently reported, the country has struggled with exports in recent weeks, with insufficient levels of crops reaching its core trading ports amid inflation costs and issues of farmers being priced out of the market due to major increases in fertiliser costs.
However, the country’s cocoa body, the Conseil du Cafe-Cacao believed that export businesses in the country would not in fact default on their existing contracts due to previous stockpiles of crops.