Nigeria is not among the top 10 producers of coffee in
Africa, which includes Burundi, Cameroon, Côte d’Ivoire, the Democratic
Republic of Congo, Ethiopia, Guinea, Kenya, Madagascar, Rwanda, Tanzania, Togo,
and Uganda.
But the overlooked coffee industry in Nigeria has the
potential to generate more than $2bn yearly, according to industry insiders who
spoke with The PUNCH.
At the moment, the Africa’s largest economy is scrambling
for revenue to finance its budget, having recorded a decline in revenue over
the years.
Since President Bola Tinubu’s administration assumed office
on May 29, there has been a notable decline in foreign reserves, amounting to
$1.91bn.
As of the close of the third quarter in 2023, Nigeria’s
foreign exchange reserves dwindled to $33.23bn, according to data sourced from
the Central Bank of Nigeria.
This signifies a year-on-year reduction of $5.01bn, compared
to the $38.25bn recorded after September 2022.
Industry players said the need for strategic investments,
modernised farming practices and value-added processing to harness the full
economic benefits of the coffee industry are sacrosanct.
Unlocking the potential of Nigeria’s coffee sector not only
promised substantial financial gains but also opens avenues for job creation
and sustainable agricultural development.
With the right initiatives, Nigeria could position itself as
a key player in the global coffee trade, contributing to economic growth and
diversification, experts said.
Coffee export
The Chairman, National Coffee and Tea Association of
Nigeria, Oyo State, Salihu Imam, told The PUNCH, “Coffee is the second most
traded/valuable of all commodities and first in Agricultural commodities in the
world. Tea is also a sought-after crop in the World.”
Nigeria’s coffee exports remain modest, with an annual
output of under one million bags. In contrast, Ethiopia, the largest coffee
exporter in Africa, is projected to produce a substantial 8.25 million,
60-kilogram bags, according to the United States Department of Agriculture.
“In terms of demand for coffee in Nigeria, last year, I
think everything including tea, meat, and coffee, we had was about $36m which
is very poor,” the President of the West Africa Specialty Coffee Association,
Segun Lary-Lean said.
“The type of coffee we produce in Nigeria is what the rest
of the world is looking for. We should be doing $2bn annually. It should be
more than that but I don’t just want to overestimate,” he said.
Lary-Lean posited that in many countries, mostly the Western
countries, “coffee is like water, so you can imagine if you are talking about
the demand for coffee, you’re talking about the water demand.”
He said, ‘’Some companies and brands generate between $20 to
$30bn from coffee.
“If you check out the American and Indonesian brands, they
are doing so much on coffee. The demand is always there.”
In 2016, Brazil, boasting a population comparable to
Nigeria’s 220 million, achieved a substantial $5.6bn in earnings. Similarly,
Colombia and Vietnam recorded $2.6bn and $2.4bn, respectively, during the same
period.
Contrastingly, Kenya experienced a 17 per cent increase in
coffee earnings to reach $254.2m in the 2013/14 crop season.
According to the WASCA Boss, “The United States imports
coffee from Africa. The demand is always there. And Uganda is making a lot from
coffee. Kenya too is making a lot from coffee. We can also do the same.”
Bottlenecks
A recent study conducted by researchers at the Cocoa
Research Institute of Nigeria, indicated that there was an overall decline in
both coffee production and exports across the African continent.
Instead of exporting in huge quantities – between 2010 and
2015, about N1.5bn worth of coffee products were imported into Nigeria,
according to the Raw Materials Research and Development Council.
Researchers attributed the decline to multiple factors,
including a lack of capacity to generate technical knowledge on high-yielding-
disease-resistant varieties, challenges posed by drought and climate change,
ageing coffee trees, inadequate agronomic practices due to weak extension
services, and a drop in the global coffee market, among other issues.
Experts admonished that Nigeria should immediately look
inwards and properly fund agriculture – an ancient and reliable industry.
Imam advised, “The Federal Government should declare a state
of emergency in agriculture and especially direct CBN to ensure commercial
Banks give out soft loans of not more than 2 per cent annual interest to
farmers to boost agricultural commodities production.
“Real farmers need effective and sustained funding of their
activities through cheap funds from the Financial Institutions.”
While funding remains an issue for the farmers, there is a
need for the government to get involved in coffee production, coffee cropping,
and coffee cultivation.
The President of WASCA said, “The government has to get
involved and support the farmers in their respective states. Land should be
given to them and cleared because sometimes it’s just too expensive to clear
farmlands. I think they are ready to work. They’re ready to go into the forest.
“They need help, they need funding. We also talk to
financial institutions to create export commodity desk for coffee cultivation,”
he said.
Fuel subsidy removal and fluctuations in exchange are
factors that affect farmers cultivating coffee. ‘’With the skyrocketing fuel
price, transporting agricultural produce has been impacted.,’’ he said.
Larry-Lean stated, “The removal of subsidies further
elevates transportation costs, compounding the challenges faced by farm
transporters.
“Poor road conditions have doubled or tripled transportation
expenses over the last few months, negatively impacting production.
“Subsidy removal, while intended to address economic
concerns, has unfortunately led to reduced purchasing capacity, affecting both
producers and consumers.”
He stated that financial hardships loom, would affect the
entire farming ecosystem and compromise overall standards of living.
Prospects
Imam revealed that Oyo State was poised to go into massive
production of coffee from the next planting season. “We are poised to churn out
and plant 2 million seeds/seedlings in the next 2-3 seasons.”
‘’The state is in collaboration with the Cocoa Research
Institute, the Nigeria Export Promotion Council, and the West African
Speciality Coffee Association.’’
He urged banks to significantly sponsor coffee production,
ensuring an ample supply for both local industries and export trade.
“With numerous farmers engaged as out-growers, collaborative
efforts with the Nigerian Export Promotion Council have been initiated to
incorporate coffee into its supported commodities.”
Nigeria covers an area of 923,769 square kilometres (356,669
sqm) and with a population of over 230 million. The country boasts of fertile
land to cultivate coffee.
According to Lary-Lean, in terms of prospects, the
government seemed interested in coffee cropping and production.
“During the Coffee Expo we had in October, we had
representatives from government institutions. We had representatives from the
Lagos State Ministry of Agriculture and the Ministry of Trade and Investment
from Abuja.
“So, I think the government is aware but the capacity to
push coffee cropping is probably the problem. And, we came to engage with the
government because it’s for revenue for the country. It is time we just focused
on coffee and other crops,” he said.
Way forward
Former Zenith Bank Chief Economist, Marcel Okeke, emphasised
the importance of implementing policies to stimulate the economy and decrease
dependence on imported goods in a conversation with The Punch.
Okeke particularly highlighted the need to enhance the
security of farmers as a crucial step in improving the agricultural sector.
Calling for a shift from small-scale farming to mechanised
farming, Okeke underscored the necessity for the government to address
insecurity issues and offer essential support to farmers.
He questioned the current state of farm activities and
emphasised that, for economic stimulation, it was imperative to enable people
to engage in farming by ensuring adequate security measures
Imam advocated for a comprehensive approach to address
economic challenges in Nigeria, focusing on reducing governance costs and
channelling savings into agriculture.
The Chairman emphasised funding for Agricultural Research
Institutes, low-interest funds for farmers, and government support in land
clearing to minimise production costs.
Furthermore, Imam called for widespread tractor availability
through local governments and cooperative associations, with repayment options
spread over several years.
The establishment of Commodities Boards to stabilise prices
and support youth entrepreneurs in adding value to agricultural produce was
also central to the proposed strategy.
He called on state governments to start to see coffee as a
cash crop that can help boost the country’s revenue.
“They should promote it like they promoted cocoa. At some
point, it was one of our major exports. Coffee is more sustainable than cocoa.
I mean, it is more climate resilient.
But it’s a pity that we are missing out on coffee.
He further proposed that the Federal Ministry of Agriculture
should have a policy on coffee that would help coffee farmers. ‘’And then give them grants because funding
is critical for them to participate in the global market.’’