Nigerian cocoa exporters are facing long delays in shipping their goods after the central bank started insisting on additional documentation to ensure proceeds are returned to the country.
At least 100,000 tons of cocoa beans are trapped at the ports and it is taking an average of 40 days to get necessary approvals from the central bank that meets shipping requirements, Pius Ayodele president the Cocoa Exporters Association of Nigeria said by email.
The central bank has suspended shipments for over two weeks to verify compliance with rules for returns of proceeds, Victor Iyamah, an exporter and former president of Cocoa Association of Nigeria, said by email. “We have five containers at the ports, some of which have left the factory for well over two months now.”
A plunge in oil prices has led to dollar shortages in Africa’s largest crude producer and a 28% differential between the official and parallel markets, creating an incentive for exporters to divert proceeds to unofficial channels.
“The central bank is just enforcing what has always been in the books, which is don’t export without declaration. People are exporting without declaration,” Bamidele Ayemibo, the lead consultant at 3T Impex Trade Academy, said by phone from Lagos. “Now central bank has blocked the loophole.”
The additional documentation requirements, which the central bank is asking shipping lines to enforce, is to track all exports and ensure proceeds are brought through official channels.
“Cocoa exporters are not against the new rule,” Kunle Ayoade managing director of Agrotraders Ltd., a cocoa exporting company, said by email. “What is cumbersome is asking shipping lines to enforce compliance that is better done with pre-shipment inspection agents and not shipping lines or terminal operators.”
The disruption in cocoa and other non-oil exports will worsen foreign-exchange shortage in Africa’s biggest economy and impede the government’s efforts to to diversify the economy away from its dependence on oil, the country’s main export. Central bank officials didn’t answer calls seeking comment. Nigeria ranks fifth among the world’s top cocoa producers, with its 2020-21 output estimated to reach 270,000 tons by the cocoa association.
“Many companies and individuals are diverting export proceeds and remittances away from approved channels while directing unmet dollar demand to the parallel market,” Murega Mungai, trading desk manager, Aza Finance said in investment note Thursday. “As dollar scarcity continues to linger, we foresee more pressure on the local currency.”