The $46.9bn opportunity Nigeria is failing to harness in rubber
Onome Amuge
Nigeria’s vast potential for rubber production has failed to manifest into a significant position in the global rubber industry, with the country instead becoming increasingly dependent on rubber imports.
Figures from the National Bureau of Statistics (NBS) underscore this concerning trend, revealing that Nigeria’s rubber imports ballooned from a staggering N631.1 billion in 2013 to an astounding N1.3 trillion in 2023, marking a steep 106 per cent increase over the last decade.
In 2013, rubber imports contributed nine per cent to the total imports of N7 trillion, while exports accounted for only 2.4 per cent of the total N14.2 trillion. This imbalance persisted in 2023, with rubber imports contributing 3.62 per cent to the total imports of N35.9 trillion, while rubber exports barely made a dent in the total N35.9 trillion exports, accounting for just 0.15 per cent.
Relevance of rubber to global economy
Rubber’s diversity and versatility make it a vital raw material across a broad spectrum of industries, from transportation to medicine.
In the transportation sector, rubber serves as the foundation for essential components like tyres, tubes, brake pads, windshield wipers, and beyond. In industry, it’s a cornerstone in the production of safety equipment, medical gear, and sports gear, amongst others. And perhaps most notably, rubber’s uses in medicine are boundless, from surgical gloves to prosthetic limbs and other medical devices.
According to industry analysts, what makes rubber so valuable is its unique combination of durability and elasticity, allowing it to perform in conditions where other materials might fail. As advances in technology lead to more innovative uses for this versatile raw material, its importance is expected to grow in the years ahead.
Market research firm Grand View Research estimates that the global rubber market was valued at $46.95 billion in 2023 and is expected to expand at a compound annual growth rate (CAGR) of 5.08 per cent from 2024 to 2030.
The research firm attributed several sectors to have propelled this growth, including rubber’s superior properties, such as abrasion and heat resistance, as well as its versatility and applicability as a valuable raw material in various industries.
Nigeria’s rubber production falls
Data from the Food and Agriculture Organization (FAO) indicates that Nigeria remains one of the world’s top natural rubber producers, coming in 12th globally and second in Africa behind Côte d’Ivoire, with an estimated production volume of 200,000 tonnes.
A report by the International Rubber Study Group (IRSG) highlighted the devastating impact of the rise of the petroleum industry on Nigeria’s once-thriving natural rubber sector.
The IRSG noted that in the 1960s and early 1970s, natural rubber ranked as the country’s fourth most valuable agricultural export commodity after cocoa, groundnuts, and palm kernels.
The emergence of the oil industry in Nigeria’s rubber belt also led to a decline in the country’s rubber sector.
Reports showed that coupled with the discovery of oil within the region, smallholder rubber farmers found themselves marginalised, with little to no government support. As a result, many rubber farmers abandoned their farms or cut down the rubber trees to make way for more profitable crops, such as oil palms, plantains, and cassava.
The decline in natural rubber production further led to the closure of major tyre production facilities and limited local consumption to low-value sectors like footwear.
Experts have cited the prevalence of low-yielding, ageing rubber trees and lack of investment in the rubber subsector as the primary causes for the decline in domestic rubber production, leading to increased imports to meet the country’s demand for rubber.
According to Igbinosun Idowu, the national president of the National Rubber Producers, Processors and Marketers Association of Nigeria (NARPPMAN), the country is in dire need of reviving its existing rubber trees to increase rubber production.
“Most plantations, particularly smallholdings, were established more than 30 years ago and have passed their economic thresholds. Re-planting some of these farms has been difficult because of poor management and funding,” he lamented.
Idowu identified several key challenges impeding the growth of rubber production in Nigeria. He highlighted the challenge of land tenure as a roadblock, stating that the current land tenure system makes it difficult to acquire or lease land for agricultural purposes. This issue is compounded by the vast amount of land required for rubber plantations, which can be challenging to obtain in the current environment.
Idowu urged the federal government to collaborate with other funding agencies to finance the growth of rubber production in the country. The NARPPMAN emphasised that the Central Bank of Nigeria, the Bank of Agriculture, and other financial institutions must fund the development of rubber in Nigeria. This, he stated, is the only way forward if Nigerian rubber is to find a comfortable position in the world.
Iyare Harrison, a rubber farmer from Edo State, Nigeria’s top producer of natural rubber highlighted issues hindering the growth of the sector in the region.
Harrison, in a chat with Business A.M., spoke on the challenges posed by the absence of modern infrastructure and funding problems experienced by farmers.
Without access to the latest tools, technologies, and financial support, Harrison believes that rubber farmers in Edo State are unable to maximise their productivity, which could limit their competitiveness in the global market.
Harrison bemoaned the absence of significant government engagement with rubber sector stakeholders, noting that this contrasts starkly with the investments made to develop food crops like rice and maize. As a result, the rubber sector in Nigeria has been stifled, according to Harrison, with low production levels and a dearth of value-added products to meet the growing demands of local and global markets.
Professor Joseph Adelegan, secretary-general of the International Rubber Study Group, stressed the importance of Nigeria’s rubber sector in the global economy. However, he noted that although funding is available for rubber production, farmers and other stakeholders face difficulties in accessing these funds.
According to Adelegan, one of the barriers to accessing funding for rubber production is a lack of skills in developing bankable business proposals.
Adelegan explained that while many entrepreneurs submit funding proposals, they often fail to meet the requirements set by funding agencies. He advocated for increased government investment in capacity-building programmes that would enable entrepreneurs to develop business plans that align with the criteria of funders.
The insecurity in Nigeria is also hampering the nation’s rubber industry, as Graham Hefer, managing director of Okomu Oil Palm Plc, attested.
Hefer recently disclosed that his company was forced to suspend its rubber plantation operations in 2023 due to increasing attacks on the company’s facilities by assailants.
Hefer stressed the importance of rubber production to the company’s revenue stream, citing it as a significant contributor to foreign exchange earnings. However, his dismay was palpable as he bemoaned the production losses resulting from insecurity, noting that their rubber farms had to be abandoned due to continuous attacks, subsequently affecting their commitments and obligations.
The lingering issues of currency devaluation, forex scarcity, substandard infrastructure, and unfavourable government policies like multiple taxation were identified as other barriers to Okomu Oil Palm Plc’s growth, in addition to security challenges.
Acknowledging the pressing need for governmental support to resolve these hurdles and boost the company’s performance, Hefer indicated that Okomu Oil Palm Plc is not currently pursuing any immediate expansion plans, barring any directives from the board.