Apart from Corona, 2020 is also the year of Chocolates for Nigeria. The efforts to crookback some of the earnings in foreign exchange loss to falling prices of oil are causing postponement in exports of various raw materials in the form of cocoa beans to cashew nuts and is totaling to the problem of the central bank to address in the first place. Nigeria is the fifth-largest producer of Cocoa beans in the world and it’s also the key ingredient of chocolate. Making it the largest economy of Africa, it also went through a recession in the last quarter.
A total estimate of about 10000 tons of cocoa beans are trapped at the ports and the rest of the 100000 tons of different agricultural commodities are stored in warehouses around the country, as stated by the President of Cocoa Exporters Association of Nigeria, Pius Ayodele.
It currently takes 40 days on average, instead of 7, to get authorized to clear the containers for shipping. The part took place post the central bank began to demand additional documentation to ensure the proceeds of the exports are returned to the country. The plunge in oil prices has made the dollar shortages worse in Africa’s largest producer of fossil fuel. While crude adds to less than 10% of Nigeria’s gross domestic product, it records for 90% earnings in foreign exchange and half of the revenue of the government.
The Hard currency is undergoing a shortage that is adding to the void between the official exchange rate and that on the parallel market. The spread currently exceeding 20% has formed an incentive for exporters to deflect the proceeds of the dollar to the unofficial channels. The slowing down in the flow of trade since October has caused a loss surpassing 500 Billion nairas ( 1.3 Billion) in non-oil revenue for exporters as stated by Tola Faseru, the President of the National Cashew Association of Nigeria.
Some traders have a flow of cash problems and loan defaults, due to the gridlock at ports, as stated by Ayodele the exporter’s association. It has been a struggle to get the shipments out of the country, and while this struggle continues, the 2020-2021 cocoa crop that is the world‘s 5th largest producer of the most important ingredient of chocolate could also surpass the initial estimates by at least 27% to touch the 270000 tons mark.
The problems are added to their burden of problems when Global manufacturers have reduced the production of chocolate. The cocoa sellers of Nigeria are struggling to find buyers desperate to enter into new forward contracts, due to many factories having to shut down operations because of the pandemic as mentioned by the president of the Cocoa Association of Nigeria, Mufutau Abolarinwa. The world buyers are putting in complaints with regards to the heavy stockpiles of unsold beans, he further added.