Nigeria’s reliance on imported palm oil has reached an alarming level, costing the nation $600 million annually, according to Alphonsus Inyang, the National President of the National Palm Produce Association of Nigeria (NPPAN).
Inyang expressed deep concern over this unsustainable expense during an interview with the News Agency of Nigeria (NAN) in Abuja on Tuesday. He highlighted the detrimental impact of this expenditure on national development, noting the potential benefits if these funds were redirected into the domestic economy.
Inyang lamented Nigeria’s fall from grace in the palm oil industry. According to him, in the 1960s, Nigeria was a global leader in palm oil production and export, controlling over 60% of the world market. Today, the country has plummeted to fifth place, trailing behind Indonesia, Malaysia, Thailand, and Colombia.
Tekedia Mini-MBA edition 15 (Sept 9 – Dec 7, 2024) has started registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
This decline has been compounded by the neglect of the palm oil sector by successive governments.
“Nigeria may even lose its current position to smaller countries that are heavily investing in their palm oil sectors,” Inyang warned.
He cited the latest data from the U.S. Department of Agriculture, which shows that Nigeria now contributes a mere 1.5% or 1.4 million metric tons of the world’s total palm oil output. In stark contrast, Indonesia leads the world with 50 million metric tons, followed by Malaysia with 19 million metric tons, Thailand with 3.28 million metric tons, and Colombia with 1.9 million metric tons.
Consumption vs. Production
Nigeria’s status as the largest consumer of palm oil in Africa, with an annual consumption of approximately three million metric tons, starkly contrasts with its domestic production of less than 1.4 million metric tons. This discrepancy results in a significant deficit of over 1.6 million metric tons, met through imports, draining valuable foreign exchange reserves and stifling local industry growth.
The Path Forward
To address these challenges, Inyang called on the Federal Ministry of Agriculture and Food Security to support NPPAN members with the necessary resources to develop 250,000 hectares of palm oil plantations annually.
“Our members can plant up to 250,000 hectares per year through the association’s National Oil Palm Strategy Development Plan; all we want are inputs,” he stated.
Inyang outlined specific needs such as seedlings, fertilizers, logistics, and implements.
“The government does not need to give and develop land for us; we need seedlings, fertilizers, logistics, and implements to close this gap within four years,” he emphasized.
By meeting these needs, he noted, the government could significantly reduce the import bill, enhance domestic production, and create new millionaires across 28 federation states.
The potential economic benefits of revitalizing the palm oil sector are substantial. Analysts, echoing Inyang’s concern, note that by closing the production gap, Nigeria could save $600 million annually, funds that could be reinvested into the domestic economy. Furthermore, they also note that enhancing local production would reduce dependency on imports, improve the trade balance, and create job opportunities, thereby boosting the overall economic development of the country.