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Nigeria risks $20bn cocoa export loss

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By Usman Oladimeji

Compliance to international standards is essential to remain competitive.

Dr. Rabiu Olowo, the Executive Secretary of the Financial Reporting Council of Nigeria (FRC), has issued a warning that if Nigeria fails to meet the Sustainability Reporting requirements, the country could lose $20 billion in cocoa Export Revenue over the next three years. Olowo emphasized that in order for the nation to remain competitive in the international cocoa market, environmental challenges like Deforestation must be addressed. He said that the council is facilitating the development of a Sustainability Adoption Roadmap to enable Nigeria companies to effectively adopt International Sustainability Standards Board (ISSB) standards.

Four companies have already adopted these standards, and others are urged to follow suit voluntarily adopting these practices by 2026, with complete compliance anticipated by 2028. While some organizations’ early adoption shows promise, further compliance is required to prevent any financial losses. Also, the council is focusing on capacity building and promotion to encourage additional adoption and guarantee a seamless transition. Compliance to these standards is essential for the country’s exports to stay competitive in the global market. This project is in line with worldwide trends, which show that sustainability is becoming more and more important to maintain market competitiveness.

Climate change has adversely affected cocoa trees.

Loss of biodiversity and soil fertility brought about by the extensive clearance of forests for cocoa planting has made it difficult to maintain high outputs. The number of exports and earnings is also impacted by lower quality and quantity of the crop which was caused by Environmental Degradation. Another major setback to crop output is Climate Change effects such as rising temperatures and erratic rainfall which has adversely affected cocoa trees. Droughts and floods are examples of extreme weather occurrences that can ruin plantations, lower yields, and eventually lower export levels.

Over the years, compliance to global sustainability reporting guidelines has emerged as a crucial factor to preserve market access and competitiveness. Buyers and customers around the globe are demanding for sustainable sourced cocoa. However, environmental concerns have a major negative influence on the crop export by lowering yield, quality, and market accessibility. If Nigerian cocoa falls short of the standard requirements, problems like deforestation and irresponsible farming methods may lead to decrease in the demand for the country’s product. Adherence to sustainability certifications such as Rainforest Alliance and Fair Trade is increasingly crucial for the country to preserve its market access and competitive pricing.

Preliminary 2023 data showed that exports were still high.

Implementing strategies like reforestation, climate resilience, and sustainable farming must be prioritized to tackle the concerning issues. The county can boost the competitiveness of its exports of the crop and guarantee long-term economic gains for its farmers and the country by placing a high priority on environmental sustainability. Even in the face of COVID-19 outbreak disrupting global supply networks, Nigeria was able to export over 230,000 metric tonnes of cocoa in 2020. Exports further rose to about 240,000 metric tonnes in 2021 as attempts to embrace sustainable reporting requirements and enhance compliance with international quality standards progress.

In 2022, export volumes grew marginally to about 245,000 metric tonnes, as the government continued to address environmental issues and encourage sustainable cultivation practices. Preliminary 2023 data showed that exports were still high and were predicted to reach a volume of about 250,000 metric tonnes. Nevertheless, the country is unwavering in its dedication to promoting sustainability and quality enhancement. The United States, Indonesia, Malaysia, the Netherlands, and Germany are Nigeria’s top export markets for cocoa. Currently, the country is exploring new markets in Asia and the Middle East.

Related Article: $2bn lost to under-explored cocoa industry

Instead of exporting raw cocoa beans, the nation is pushing for the export of processed goods such as cocoa butter and powder in order to boost export value and generate employment locally. Even though there are encouraging indicators about export value and diversification, Nigeria must address difficulties related to infrastructure, quality, and production, to fully harness its exports potential. Placing great emphasis on sustainability, enhancing agricultural techniques, and tackling environmental concerns is crucial for the country to maintain its position as a major player in the international market. Future cocoa export success for Nigeria will depend on sustained efforts to improve the sustainability and quality of production.


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