• Sayali Marathe

Shaping Nigeria’s Food Industry

Updated: Oct 22

By Ifeoluwa Oseni

The Nigerian food industry was worth over $3.2 billion in 2016 according to an article on the Nigerian Investment Promotion Commission. Despite the economic downturn and a decline in consumer spending power over the years, the food industry is one of the best-performing industries in Nigeria. Part of the food industry like the Carbonated Soft Drink (CSD) segment has constantly grown over the years and is one of the most competitive sectors in the food industry. Agriculture is the largest sector of the Nigerian economy that employs about two-thirds of the entire labour force in Nigeria, yet the country is not food sufficient.


Nigeria is the largest foodstuff market in Africa, according to data from the World Trade Organisation which was published on AsokoInsight, with both significant investment in the local industry and a high level of imports. The food and beverage (F&B) sector makes up 22.5% of the manufacturing industry, generating an estimated 1.5 million jobs and 4.6% of Nigeria's GDP.


Most of the food industries are located in the Yoruba speaking dominated South Western part of Nigeria consisting of states like Oyo, Ogun, Osun, Ondo with Lagos state having the largest number. AsokoInsight states that 88% of Nigeria's top food and beverage companies are headquartered in Lagos State. About 91% of this industry is owned by private individuals and organizations dominated by small and medium enterprises, as well as multinational food companies such as Dangote Food, a subsidiary of Dangote Group.


For years, smuggling of food products via the Nigerian border used to be a major challenge. However, it has drastically reduced with the shutdown, the Nigerian Federal government's diversification initiatives, the Nigerian Export Promotion Council (NEPC) marked out 13 national strategic export products and services to replace oil. This would increase Nigeria’s foreign exchange earnings and help provide alternate sources of revenue. These 13 export products include palm oil, cocoa, cashew, sugar, and rice. t another major issue affecting this industry, as local farmers live in fear from herdsmen who graze their cattle on the farmers’ farms. Violence breaks out when these two groups clash.


Nigeria with a total land area of 923,768 sq km which is fertile, arable and suitable for agricultural use. As seen in an article written on Mondaq, the Nigerian Federal government's diversification initiatives, the Nigerian Export Promotion Council (NEPC) marked out 13 national strategic export products and services to replace oil. This would increase Nigeria’s foreign exchange earnings and help provide alternate sources of revenue. These 13 export products include palm oil, cocoa, cashew, sugar, and rice.

 

The Nigerian government has been and is trying to increase the production of targeted agricultural commodities such as cereals, cotton, roots and tubers, sugarcane, tree crops, legumes, tomato, and livestock. 


Nigeria is the world’s largest producer of cassava, cowpea, and yam. The West African country earned $136 million from Cassava farming in 2013 as seen in a Cassava article written by the International Institute of Tropical Agriculture. Cassava supports the livelihood of over 300 million Africans, making it the second-largest consumer of cassava. In 2017, more than 291 million tons of cassava were produced globally with Nigeria producing almost 20% of this value and exports about 3.2 million tons of cassava annually. More than 7.4 million tons of dried cowpeas were produced worldwide in 2017 with Africa producing nearly 7.1 million of cowpea. Nigeria accounts for 46% of the total production globally and is the largest consumer of this agricultural produce. 


With all this information, it is saddening to know that Nigeria is a food-deficit nation and depends on imports of grains, livestock products, and fish to feed its large population.


Nigeria is also the largest consumer of rice in Africa. In August 2019, Nigeria closed its land borders to help in the fight against smuggling of imported goods especially rice from neighbouring countries such as Benin. Despite the ban on imported rice in Nigeria and the shut down of the country border, the local rice industry has not been able to meet up with the demand of this staple food. This is because they do not have enough capital, technical know-how to supply Nigerians with enough rice. 


This has led to an increase in the price of rice in Nigeria becoming more expensive than when it was imported. As reported on the Reuters, BBC and local media in Nigeria, the Central Bank of Nigeria (CBN) banned the use of its foreign exchange to pay for rice imports in 2015. A hefty 70% tariffs on imported rice was imposed by the CBN to discourage importation of rice and encourage the investment in the local rice industry and production of local rice in Nigeria. While most rice farmers in Nigeria make about $4900 (about a million naira) in a good year, this is not enough for them to buy a tractor which costs more than 5 times their yearly gain. Dangote Rice Limited, an affiliate company of the Dangote group, a rich indigenous company has begun setting up rice processing facilities in Nigeria. They hope this will improve the livelihoods of at least 100,000 rice farmers in Nigeria.


The Nigerian Federal Government has deployed numerous incentive schemes and policies to make the agricultural sector attractive for investment and shifting attention to this sector. Nigerian website Businessday.ng cited the Nigerian National Bureau of Statistics (NBS) as the source for the fact that the foreign investments in the Nigerian agricultural sector rose by 82% from $159 million in 2017 to $289 million in 2018. According to Indusren, the agricultural sector contributes 47% to the Nigeria Gross Domestic Product (GDP) and is responsible for 10% of its export earnings. Foreign direct investment inflows is $6.1 billion and the GDP is growing at a rate of 7.71 per cent, making Nigeria the fastest growing economy in Sub-Saharan Africa.


Nigeria, the 7th most populous country, needs more investment to help feed and solve its food inadequacies which are very profitable for investors. Some successful multinational companies who have invested in the Nigerian food industry:

  • Coca-Cola: Coca-Cola manufactures non-alcoholic beverages with its primary products being the carbonated soft drinks and syrups.

  • Nestlé: Nestlé is the world largest food and beverage company. Nestlé is one of the foremost food manufacturing and marketing companies in Nigeria. They produce baby foods, cereals, chocolate and confectionery, coffee, dairy, and drinks.

  • UAC: UAC Foods Limited is a leading manufacturer and Marketer of tasty, nourishing convenience foods in Nigeria and pioneered the Sausage Roll market in Nigeria.

  • Cadbury: Cadbury is the second-largest confectionery company in the world. Its products include Dairy Milk chocolate, the Creme Egg and Roses selection box.

Other multinational companies who have made success in Nigeria food industry include Heineken, Guinness, Danone, Chikki Foods Industries Limited, Leventis Foods Ltd.


Ifeoluwa Oseni is an intern at M74, and a recent graduate from the University of Ibadan in Nigeria, where he studied Computer Science. His interests include cybersecurity, politics, and technology. He loves telling stories of positive changemakers in Africa on his blog, InterviewStories.


The views expressed above are those of the author and do not reflect the official position of the M74 Group, which remains neutral on all matters. Publishers assume no liability for content.

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