Before the discovery of crude oil
in Nigeria in 1958, the Nigerian economy was majorly driven by agriculture. In the
1960s, Nigeria was the number one exporter of palm oil globally and also
accounted for about 47% of groundnuts (peanuts) traded in the global market.
The Nigerian economy was vastly boosted by its agricultural diversity.
Agriculture played a key role domestically in production, employment and
foreign exchange earnings. Sadly, the country turned its attention to oil after
it was discovered. The agricultural sector remained stagnant in the 1970s while
the country celebrated the oil boom also within this period. As you can
imagine, that led to the gradual and then rapid decline of the sector.
The decline of the agricultural
sector was not driven by natural or climatic factors but majorly by human
neglect. Currently, about 78% of Nigeria’s total land area of about 91million
hectares is considered agricultural land. However, less than 50% of this arable
land area is currently being cultivated. Major crops produced in Nigeria
include: cocoa, gum arabic, kola nut, maize (corn), sesame, sorghum, millet,
soya beans, coconut, cashew nuts, groundnuts (peanuts), rice, rubber, cotton,
cassava, palm fruit (palm oil, palm kernels), plantain, banana, yam, citrus
fruits and melon.
Nigeria currently ranks third
largest exporter in Africa of grade one gum-arabic which is produced by acacia
trees. Its use in a variety of industries including food, beverages,
pharmaceutical and cosmetics make it a very attractive product for investors. Sesame
seeds, sugarcane, leather, citrus fruits, rubber, cotton, cassava chips, cashew
nuts, cocoa beans, groundnuts and rice are also few other agricultural products
that can be cultivated in large quantities in Nigeria and exported to other countries.
Besides exportation, the Nigerian
product market is still growing and has a large room to accommodate investors. There
is still a large gap in the market for investment in the food processing
industry. The fruit juice production market is still growing, this market lacks
indigenous varieties and product standards are still improving. Most fruits
including pineapple, citrus fruits, water melon, papaya, mango, coconuts,
carrots and tomatoes are locally cultivated in large quantities, therefore
production costs are minimal. Processed food like tinned tomatoes, tomato
puree, sardines, corned beef and other tinned foods are largely sought after in
Nigeria, but are mostly imported because of the highly insufficient local production.
The large local cultivation of sugarcane makes owning a sugar factory very
possible. This will also be a welcome development, seeing that most of the
sugar consumed in Nigeria is imported from other countries.
Investors can benefit from
Nigeria’s very large and lucrative livestock industry by purchasing leather at
very affordable rates. The Nigerian textile industry is still far from
developed and crying out for exploration. With the ready availability of good
quality cotton and leather, very affordable land, cheap labour both skilled and
unskilled due to a high population, the textile industry in Nigeria is every
investors dream.
The Nigerian government also
realises the importance of growing this sector and therefore has introduced
several incentives to encourage investment. They include:
·
Zero duty on agricultural machinery importation
·
Pioneer status incentive (three years tax
holiday) for agro-processing industry
·
Bans/restrictions have been placed on the
importation of several food items to encourage local production
·
And several other export incentives for
manufacturers in the agricultural sector.
Olives Consultancy Services
assists investors looking to invest in the Nigerian markets in a variety of
ways. Please visit our website www.olivesconsulting.co.uk
for more information or send us an email on admin@olivesconsultancyservices.co.uk.
We have offices both in the UK and in Nigeria. We will be happy to read from
you and answer your questions too. Please feel free to comment below. Many
thanks from the Olives team.
