Nigeria, like many African countries, exports crude gum arabic at low prices but re-imports processed gum at substantially higher prices to meet local manufacturing demand. This paradox offers huge investment potentials for investors willing to process and sell as there are just one or two companies doing that in the country at the moment.
In 2016, Nigeria earned $43m foreign exchange from export of crude gum arabic, according to sources in the Ministry of Agriculture. However, Nigeria’s total export of gum arabic amounted to less than 12,000 tons while Sudan, the world’s largest producer, exported about 60,000 tons to Western Europe and US alone in the same period. A ton of the commodity in the international market now sells for $1,000 to $1,500, while the processed gum is sold for about $3,200 to $3,800 per ton.
This means that if we were to sell more of processed gum, and increase output quality and quantity, then we can earn more than $100m and create employment for many unemployed people. Sudan and Chad together account for about 95% of the global market. Nigeria has lost its US market share of Grade 1 gum Arabic because it failed to meet the necessary standards for production and export.
China and Japan import Grade 1 gum Arabic only from Sudan. India is the major importer of Nigerian gum Arabic because it buys mainly Grade 2, and mixed grades. Most of Nigeria’s Grade I gum Arabic trees grow in three states: Borno, Jigawa and Yobe, due to climate and soil which is well suited to the Acacia Senegal tree. According to Markets and Markets, a market research agency, the global gum Arabic market is projected to reach $800 million by 2019.
Gum Arabic, also known as “desert gold of Africa” is the dried exudates obtained from stems and branches of Acacia Senegal (L.). It is a natural product derived from hardened acacia tree sap, harvested in the Sahel region of Africa. The crop adapts naturally to the hot, dry and barren regions of Africa particularly in areas along the southern frontiers of the Sahara desert including Mauritania, Senegal, Mali, Niger, Nigeria, Chad and Sudan. Indeed, the three largest exporters of crude gum arabic are Sudan, which accounts for 66% of the total, Chad with 13%, and Nigeria with 8.5%, in 2014–2016.
Given its many desirable properties, safety record and natural origin, gum arabic is the most commercially valuable of what are known as exudate gums – those secreted by plants. The crop is a strategic raw material with world-wide application in the food, beverages, confectionery, pharmaceutical and Chemical Industries. In the food/beverages and confectionery industries, gum Arabic is used as an emulsifier, a stabilizer, a fixing and jellifying agent, among other uses. In the pharmaceutical and chemical industries, it is used as a binding and coating agent. It is used as a stabilizer, a binder, an emulsifier or a viscosity-increasing agent, not only in confectionery, soft drinks, wine, liquor, and dietary fibre, but also for non-food products such as pharmaceuticals, cosmetics, printing, ceramics, photosensitive chemicals, textiles, paper, ink, paints and adhesives.
The product finds worldwide use also in environmental protection by curtailing desert encroachment because of its low water consumption rate and ability to survive in adverse weather conditions. In erosion control, the roots of the gum Arabic tree have very strong grip on the soil thereby holding the soil together and preventing erosion. According to a new report by the United Nations Conference on Trade and Development (UNCTAD), it is imperative for the producing countries to explore local processing opportunities as many African countries that export crude gum arabic at low prices re-import processed gum at substantially higher prices to meet local manufacturing demand.
The report showed that Nigeria has been hindered by quality inconsistency, poor market organization and production disruptions due to the Boko Haram insurgency.
Up to 1966, Nigeria was the second world largest producer of gun Arabic after Sudan. Nigeria however lost this position to Chad due to lack of attention to the development of this valuable product. Bush burning, absence of research and improved seedling, lack of forest renewal, absence of new plantation, declining productivity of old trees, felling of trees for use as firewood, have all combined to reduce Nigeria’s productive capacity of gum Arabic.
Two countries, France and India, import three-quarters of all crude gum arabic. After processing, France alone exports two-thirds of all processed gum arabic. Notably, a single European manufacturer, France-based Nexira – which calls itself a “manufacturer of natural innovative ingredients for the food, nutrition and health industries” – is said to hold a 50% global market share in processed gum arabic products.
Gum Arabic is a promising commodity for producing countries due to its potential to generate foreign exchange, create employment, promote sustainable agriculture and forestry, and ensure food security and combat desertification and climate change. Individuals and businesses need to get more involved by getting more information from research institutes in the country, improving workers’ skills, increasing product differentiation and value addition, enhancing marketing and finance solutions. The government also needs to support the economic activity by fostering political stability, especially in the northern region, though our research institutes now have improved species that can thrive in the southern part of the country.