Nigeria is home to the largest economy in Africa with a GDP that’s set to hit $574 billion in 2023 according to forecasts from the International Monetary Fund (IMF). A primary contributor to the country’s burgeoning economy is its thriving agricultural industry. While the popular opinion is that Nigeria relies almost exclusively on its oil products for revenue, agricultural exports contribute a significant chunk of its total earnings.
Lately, the Nigerian government through its Ministry of Agriculture and Rural Development has intensified efforts into bolstering the agricultural sector with intentions to further diversify the economy and cut down dependence on oil revenue. As such, the agricultural sector, particularly in cocoa and cashew production has witnessed significant changes in the past few years. Let’s examine the current landscape quickly.
General Outlook on the Nigerian Agricultural Export Industry
Thanks to the sizable contributions from relevant stakeholders and the government, the Nigerian agricultural export industry has experienced steady growth in recent years. Over the last 4 years, Nigeria earned approximately $22.6 billion from non-oil exports with agricultural products accounting for around 25% of the total figure according to data from the National Bureau of Statistics.
The Nigerian Agricultural export industry predominantly focuses on cash crops and raw materials such as cocoa, cashew nuts, sesame seeds, shea butter, and hibiscus flower among others. Due to the high demand for these products in international markets, the country is able to generate significant foreign exchange from them.
That said, the current Nigerian agriculture industry is very much in the building stages with encouraging performances over the past few years. But it also has its share of challenges pushing back against its growth.
Forklift Carrying Bags
Challenges
A primary setback factor for the Nigerian agricultural export industry ties around the lack of adequate infrastructure. The existing transportation networks are not sufficient to facilitate the easy transfer of goods from production areas to storage facilities and then, ports.
In addition, freight transport in Nigeria is heavily reliant on road means. This fact, coupled with the disappointing conditions of many roads across the country also negatively impacts the growth of the agriculture sector.
Typically, it costs more to move products from areas of production to warehouses and ports. Most farmers can’t keep up with the ever-increasing transportation costs. Thus, they get discouraged from attempting to move their products themselves. Instead, they rely on secondary retailers like Sunbeth Global Concept Limited who have market expertise as well as the necessary haulage and warehousing facilities to help them get their products to end buyers.
In addition, poor and outdated farming practices may result in low-quality yields causing a reduction in the product’s value and ultimately, the sector’s profitability.
Another major challenge facing the industry is inconsistent government policies that can often undermine traders’ efforts. Fluctuations in trade policies and regulations create an unpredictable environment for farmers and exporters, causing uncertainty in the market. This inconsistency also makes it challenging to attract foreign investment into the sector.
Growth Prospects
Despite the challenges it’s facing, the Nigerian agricultural export industry shows significant growth potential. The country’s vast landmass and favorable climate provide ideal conditions for farming, making it possible to produce a variety of crops all year round.
As we alluded to earlier, the Nigerian government has taken several steps to support the agricultural sector’s growth. These are evident in the investments in research and development, provision of financial incentives to farmers, and efforts to create a favorable business environment for exporters. These efforts have led to an increase in production, putting Nigeria among the largest cocoa and cashew nut producers globally.
Bags of Cocoa Loaded on a Truck at a Warehouse
Opportunities
The Nigerian agricultural export industry presents several opportunities for farmers, investors, and exporters.
For Farmers
The increasing demand for organic and sustainably produced raw materials presents a profitable avenue for Nigerian farmers. By adopting modern sustainable farming practices, farmers can produce high-quality products that meet international standards, and as a result, attract premium prices.
For Investors
Considering the sector is still in the growth stage, particularly in the area of infrastructure development, investors can take advantage of emerging trends in the sector and gain first-comer benefits through the development of infrastructure, logistics, and value-addition initiatives.
This would help to improve efficiency and reduce the cost of production in the sector, thereby increasing its profitability. Value-addition initiatives are also profitable ventures investors can engage in. For example, cocoa processing into cocoa powder and chocolate derivatives is an attractive prospect with a ready market both locally and internationally.
For Exporters
For exporters, there is a significant opportunity to access a vast market of consumers in Europe, Asia, and America. With the growing demand for organic and natural products, Nigerian exporters like SGCL are capitalizing on the country’s diverse range of crops, primarily cocoa, and cashew nuts to meet the demand for sustainably produced food products.
The Nigerian agricultural export industry has significant growth prospects, particularly in the cocoa and cashew nut export sectors. The industry presents several opportunities for farmers, investors, and exporters, but several challenges must be addressed to realize its full potential.
By investing in infrastructure development, adopting sustainable farming practices, and providing a favorable business environment, the Nigerian agricultural export industry can unlock its full potential, create jobs, and contribute to the country’s economic growth.
