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Nigeria, others losing $49bn in rubber market

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By Usman Oladimeji

It is projected that the market will attain a valuation of $64 billion by 2028.

Major rubber producers in the West Africa region, including Nigeria, are falling short to capitalize on the burgeoning market, resulting in an annual estimated loss of $49 billion. According to the recently published Report Insight (2023-2030) on the market by Market Report World, it is projected that the market will attain a valuation of $64 billion by 2028. Reportedly, western region accounts for a large proportion of the continent’s overall natural rubber production, amounting to approximately 1.1 million tonnes. Various countries shared this figure with Côte d’Ivoire leading at 82.4 percent, followed by Liberia at 9.1 percent, Nigeria at 4.6 percent, and Cameroon at 3.9 percent.

By 2026, Côte d’Ivoire is projected to overtake the likes of Philippines, India and China, others and become the world’s third largest natural rubber producer by volume, with its exports expected to reach $936 million. Whereas, Nigeria, Liberia, and Cameroon are reported to be experiencing internal difficulties that are limiting them from expanding their output in the African market. According to the Food and Agriculture Organization (FAO), Nigeria is the 12th largest producer in the world and the 2nd largest producer in Africa, with an estimated production of 200,000 tonnes.

The country failed to capitalize on the industry’s potential.

While natural rubber is used to make items like erasers, electrical insulation, and elastic bands, tyres are actually made from synthetic elastic polymers derived from crude oil through a process called fractional distillation. A report by SkyQuest found that in addition to growing costs and a scarcity of raw materials, tire manufacturers across the world were encountering a number of other difficulties in the rubber industry. Despite the Nigerian government’s efforts to diversify the economy away from its reliance on oil, analysts indicated that Nigeria failed to capitalize on the multibillion-dollar available potential in the industry.

A contributing factor, as cited by Dr. Victor Iyama, president of the Federation of Agro Commodities Association of Nigeria (FACAN), is the failure of the Presidential Initiative on Rubber, established in 2006 to facilitate increased production and local processing of the product. The Initiative was targeted to increase output by reviving plantations, establishing new plantations to increase hectares under cultivation, promoting yield improvements through the use of improved clones, and resolving technological and socioeconomic barriers to higher output. Others include diversifying the product’s local usage, expanding the market by providing infrastructure, and exploring further local and foreign markets.

Government involvement in the production is crucial.

He posited that the country has yet to fully capitalize on its export prospects, a potential means for generating more forex reserves amidst the prevailing foreign exchange scarcity. Iyama, however, revealed that the Nigerian Association of Rubber Producers, Processors, and Marketers (NARPPMAN) has stepped up its endeavours to expand its domestic production and expand Nigeria’s export market. As a result of smallholders, in particular, abandoning and destroying trees in favour of presumably more lucrative annual food crop farming, only around 40% of Nigeria’s generated potential is being harnessed currently.

NARPPMAN, in recent times urged the government to include rubber on the list of cash crops to be developed in Nigeria. Peter Igbinosun, president of the association, said the government involvement in the production is crucial due to the vast by-products and economic values. Taking the economic values into account, he noted that NARPPMAN is planning an extensive cultivation with the aim of generating 640.000 employment opportunities. The initiative will create 160,000 indirect jobs for service providers. Over the course of ten years, Igbinosun said, NARPPMAN will plant rubber on 160,000 hectares of plantation across 24 states.

Total value of exports stood at $21,063,000 in 2020.

Igbinosun estimates that smallholders and industrial plantations in Nigeria currently manage over 200,000 hectares of plantation land. The sector is “a goldmine,” according to Igbinosun, who claims it could employ more than 800,000. The data provided by the International Trade Centre’s – Trade Map indicates that Nigeria’s exports have experienced a decline since 2009. Total value of exports and its articles in 2009 amounted to $175,452,000 and then surged in 2010 to $558,945,000. The value has subsequently dropped to $42,080,000 in 2019 and $21,063,000 in 2020.

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