NAFDAC’s proposed export regulations drive cocoa processors to despair

Onome Amuge

The Cocoa Processors Association of Nigeria (COPAN) recently raised a storm of protest against the impending 2024 export regulation bill proposed by the National Agency for Food and Drug Administration and Control (NAFDAC), contending that it poses a dire threat to the chocolate industry’s lifeblood. The bill, like a stifling cloak, stands to suffocate the industry’s breathing room, they argue, stifling the flow of their export-driven growth and leaving them teetering on the brink of economic stagnation.

COPAN, which represents manufacturers that process raw cocoa beans into various products like cocoa cake, cocoa powder, cocoa liquor, and cocoa butter, both for local consumption and for export,  criticised the proposed regulation in a statement signed by its chairman, Felix Oladunjoye.

The organisation noted that NAFDAC’s proposed regulation bill would be detrimental to the cocoa processors’ businesses. It also emphasised that NAFDAC lacks the necessary infrastructure and human resources to regulate the large number of export transactions occurring at sea and airports in Nigeria.

“NAFDAC’s proposed export regulations 2024 are a sheer duplication of efforts and functions of other government agencies. If the National Assembly passes the proposed export regulations 2024, the resultant effects would be multiple taxation, delayed shipments resulting in international contract default, heavy penalties on Nigerian exporters, loss of employment, and worsening company profitability,” it stated.

Despite Nigeria’s potential to significantly boost its earnings from the export of cocoa beans and contribute to the national GDP as its neighbors Cote d’Ivoire and Ghana have done, members of COPAN claim that operational costs have become a significant challenge in recent years. The high cost of production, transportation, and other overhead expenses is threatening to derail the cocoa industry’s journey to greater success, leaving many processors struggling to remain profitable and competitive in the global market.

Oladunjoye noted that Nigeria’s position in the global cocoa industry has been compromised due to unfavorable government policies. He lamented the fact that Nigeria, once a leading player in cocoa production, has now fallen to the sixth position worldwide and third in Africa, behind Cote d’Ivoire and Ghana. According to him, the government’s inability to create a conducive environment for the industry’s growth, including providing adequate infrastructure, incentives, and support, has left the country lagging behind its peers in the race for dominance in the global market.

NAFDAC holds firm on export regulation push  

NAFDAC has argued that its proposed export regulation plan is a vital step towards establishing order in Nigeria’s export industry and ensuring that only high-quality products are exported from the country. The agency believes that a standardized regulatory framework would bring about much-needed accountability and help to uphold the reputation of Nigerian goods in the international market.

Christianah Adeyeye, the director general of NAFDAC pointed to the current lack of regulatory oversight in food safety and inadequate product quality control as the primary reasons for the need for stricter regulations. She stressed that, without proper regulations, Nigerian exports risk being seen as inferior in the international market, damaging the country’s reputation and potentially limiting its export opportunities.

Speaking at a national stakeholder workshop for Exporters of NAFDAC Regulated Products in Lagos, Adeyeye highlighted the importance of incorporating global best practices into export trade facilitation. With internationally accredited laboratories now present across the country, NAFDAC, according to the DG, is committed to implementing a regulatory framework that aligns with international standards.

Adeyeye attributed the previous and persistent international rejection of Nigerian exports to three major factors:

• Lack of regulatory supervision in food safety and quality
• Evasion or rejection of statutory minimum requirements for product quality, packaging, and storage conditions for international shipping
• Ignorance of regulatory requirements from the importing country
• Uncontrolled sourcing of products from the open market without proper quality control, resulting in issues such as high pesticide residue, microbial load, and aflatoxin content
• Corruption in regulatory systems and operatives, leading to personal gain and compromised standards
• Unethical and unprofessional practices such as adulteration of goods for weight gain

On NAFDAC’s plans, she said: “Going forward, we are determined to challenge the status-quo and we request the support and goodwill of well-meaning exporters to cooperate with us in this endeavour. We are assiduously working with the relevant stakeholders (like the CBN Trade & Exchange Dept, The Nigeria Customs Service, The Federal Ministry of Trade & Investments, PIAs etc.) towards the full automation of our export licensing of regulated products on the national single window for trade, where NAFDAC licenses will be a requirement for issuance of form e-NXP for regulated products.”

In light of the challenges facing Nigeria’s export industry, Adeyeye stated that the NAFDAC Statutory Export Regulation which is in the process of being gazetted, aims to strengthen its regulatory infrastructure and improve the quality of exports.

The agency, she explained, intends to achieve this by working collaboratively with exporters, starting from the farm through to packaging, to ensure compliance with Good Agricultural Practices (GAP), Good Handling Practices (GHP), and Good Manufacturing Practices (GMP), as well as incorporating global Sanitary and Phytosanitary Measures (SPS) into the product quality assurance process.

Cocoa processors fear detrimental effects of NAFDAC’s regulation move

Oladunjoye, on behalf of the Cocoa Processors Association of Nigeria highlighted several provisions within the proposed NAFDAC Export Regulations 2024 that he deemed to be unfavourable for businesses. Specifically, he referred to Sections 3, 4, and 17 as potentially damaging to the cocoa processing industry.

The chairman singled out Section 17 as a particular point of concern. This section outlines the process for obtaining an export certificate from NAFDAC. It states that if an application meets the agency’s requirements, a certificate will be issued, but if the application is deemed unsatisfactory, the applicant will receive a written rejection stating the reasons for denial.

Oladunjoye elaborated on his objections, particularly focusing on the issue of regulatory overlap. He argued that by taking up this export regulation, NAFDAC would be duplicating the duties of the Nigeria Export Promotion Council (NEPC), which is already responsible for regulating all exports as a federal government agency.

The COPAN chairman acknowledged that no exporter can leave Nigeria with any commodity without obtaining an export certificate or license from NEPC. However, he reiterated that the proposed regulation by NAFDAC is essentially a duplication of work and therefore entails double payment for the same service already provided by NEPC.

Furthermore, Oladunjoye pointed out that Section 7 of the proposed NAFDAC Export Regulations 2024 could also be problematic. This section provides for inspection of facilities and products by NAFDAC prior to export.

According to Oladunjoye, the section stipulates that NAFDAC should:

• Inspect facilities involved in producing products for export where applicable.
• Conduct pre-shipment examinations of consignments intended for export.
• Review documentation required for export to ensure compliance with regulations.

The COPAN chairman  explained further that NAFDAC’s proposed role in the pre-shipment examination of consignments was already being fulfilled by NEROLI, the pre-shipment agent appointed by the federal government.

According to him, by attempting to take on this function, NAFDAC is seeking to carry out the duties of NEROLI, which already conducts pre-shipment examinations and issues clean report of inspections (CCI).

Oladunjoye highlighted the potential consequences of the proposed NAFDAC Export Regulations 2024. He stated, “So, our clients would be saddled with the responsibility of engaging two pre-shipment agencies on the same transaction before it would be able to export, thus leading to duplication of efforts, time-wasting, loss of revenue to the exporters and delay in shipment.”

He also criticised the proposed requirement for a pre-shipment examination, deeming it unnecessary. In addition, he highlighted the broad powers granted to NAFDAC under Section 18, which would allow them to seal any premises without a court order.

Oladunjoye further expressed his concern over the proposed Section 18 of the NAFDAC Export Regulations 2024, which he deemed too extreme and potentially open to abuse. He also argued that this provision was in conflict with the provision of Section 44 of the 1999 Constitution (as amended), which guarantees the right to fair hearing and just compensation for the compulsory acquisition of property.

Fearing the negative repercussions of the proposed NAFDAC Export Regulations 2024, Oladunjoye made an appeal to the National Assembly. He urged the legislators to reconsider the proposed bill and to take into account the potential damage it could do to the growth of the non-oil sector, particularly the cocoa processing industry, which has the potential to greatly contribute to the Nigerian economy.

Oladunjoye expounded on the challenges facing the cocoa processing industry in Nigeria. He stated that setting up a new cocoa processing factory today would require a minimum investment of N60 billion, highlighting the significant barriers to entry for potential new players.  He noted that existing factories are operating at less than 30 percent of their full capacity, as the challenging business environment in the country makes it difficult to operate profitably.

The COPAN chairman also lamented that not only do cocoa processors in Nigeria face high operational costs, but they also struggle with the burden of multiple taxations, which further erodes their profitability. He revealed that the cost of shipping a container of cocoa beans stands at around N1.5 million, while a container of cocoa butter or liquor costs about N3.5 million, in addition to the charges levied by the shipping companies.

According to him, this heavy financial burden, coupled with loans taken from banks, has pushed many members of COPAN to the brink.

Oladunjoye stressed that, unless significant improvements are made to the cocoa industry’s infrastructure and regulatory environment, Nigeria risks losing further ground in the global cocoa market.