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Nigeria: The changing face of the Shea butter industry

Published date:
Wednesday, 10 February 2010

On a recent sunny afternoon in Minna, Nigeria, Thompson Ogunsanmi had a list of new developments in the area’s shea sector to share. It was a long list.

Activity in the shea business has increased rapidly in the last year, thanks at least partly to the industry’s 2009 annual conference. With “Global Shea 2010: Maximizing Quality, Expanding Markets” set for March 16-19 in Bamako, Mali, many are expecting it to increase even more.

“Shea 2009 allowed Nigerians to see what was happening in Ghana and Burkina Faso and elsewhere,” said Mr. Ogunsanmi, who organizes and trains women’s groups working in shea as an agent of the German development organisation, GTZ. “And they saw that there was some real potential in shea. When we got back from the conference, things really began to happen.”

“It was an eye-opener for us,” said Ahmed Kontagora, director-general of the Niger State Commodities and Export Promotion Agency. “We are going to Mali for Global Shea 2010 in a big way so we can ensure we have gotten a market.”

Everyone in the industry and even outside of it has noticed the uptick. And contributions to its development are coming from a variety of sources.

“I have seen first-hand the shea butter processing being rejuvenated around Nigeria,” said, Robin R. Sanders, the U.S. Ambassador. “This is a wonderful natural resource of Nigeria and seeing it used to help people gain employment and change their lives has been heart-warming.”

The AGOA Resource Centre at Nigeria’s Bank of Industry in Lagos, which Ms Sanders has championed tirelessly, has connected shea exporters to producers in Niger State.

“They’ve been sending a lot of people to us,” Mr Kontagora said. “We’ve been matching them up to producers - that’s a big achievement.”

The Trade Hub’s finance team has helped banks recognise and understand the opportunities for profitable lending, too.

Working with the Niger State government, the Bank of Industry has made over $6.5 million available for financing agribusiness, and almost $30,000 has been approved for loans to cooperatives, said Ezekiel Adekogbe, an officer at the bank who does credit appraisals.

A Trade Hub-organised workshop in July 2009, “Financing Shea in Nigeria,” helped clarify the opportunities, and Trade Hub finance experts, bankers, companies and investors will attend Global Shea 2010 to analyse, discuss and capitalise on opportunities across the region.

Shea changes communities

Increased activity is rippling through communities where shea has been an economic and cultural force for millennia, as a quick visit to the community shows.

The Local government is making greater efforts to protect shea trees. When a truck full of charcoal made from the wood of shea trees was stopped and the trader arrested, it sent a powerful message, Mr. Ogunsanmi said. Although the tree’s wood makes good charcoal, it is now far more valuable for the product that comes from its nuts, not to mention the environmental damage that cutting down trees can cause.

The market has reacted to improvements in quality, with higher quality shea butter fetching higher prices and major international buyers are returning to Nigeria to source shea nuts. Jacob Shinka, who runs Meena Agro Oils, said he has had to turn away buyers because the over 200 cooperatives he works with could not meet buyers’ demands.

A public-private partnership in Niger State will see three new “shea butter villages” – processing facilities based on a Trade Hub-trained entrepreneur in Ghana – built and in operation by the end of the year.

Thousands of women are organising cooperatives to better protect and promote their shea activities. They are opening bank accounts and receiving training to improve the quality of the shea nuts they collect and the butter they produce.

Global Shea 2010: the industry’s ‘must’ event

Nigeria’s experience reinforces the importance of Global Shea 2010’s dual themes: quality and market. These are the dominant issues for the industry, which saw a dip in activity in 2009 due to the global financial crisis but is poised for an exciting rebound in 2010, said Trade Hub Shea Expert, Peter Lovett.

“The annual conference connects all the players, you literally have everyone with an interest in this industry in the same room,” Lovett explained. “The results are predictable and significant: Businesses meet, share information and ideas, find solutions to issues they face and make a lot of deals.”

A full-day training is opening the conference and features specific presentations on marketing and access to finance, among other topics.

But the real attraction is the people who come: every major company in the industry is expected, high-level government officials will attend, experts on production quality and marketing will share their experiences and ideas, service providers, including bankers and transporters, will be on hand, too.

An international buyer said, “We identified sources in Mali and we’re still working on deals with other producers we met at the conference,” said Peter Stedman of The Body Shop.

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