Nigeria Food and Agriculture
Nigeria relies heavily on oil as its main source of foreign exchange earnings and government revenues. The Nigerian government has attempted to diversify its economy away from oil and prioritized agricultural production in recent years. The primarily protectionist approach in favor of domestic production to boost the economy, ensure food security, create jobs and save its depleting reserves has not generated the expected impetus on agricultural production and has led to widespread food shortages and price increases.
Foreign exchange restrictions have been imposed on more than 40 imported food items. The ban has adversely affected many businesses including manufacturers, vendors, and U.S. food franchises which source much of their raw material inputs overseas due to local supply shortages.Commodities like rice which is a key Nigerian staple, fish, maize, fish, palm oil, pork, beef and poultry produced locally are grossly insufficient to meet domestic demand, hence the need for imports. The supply gap created by the restriction has engendered the influx of new investments in the agricultural value chain leading to an uptick in activities in the sector though food shortages still remain.
While Nigeria’s foreign exchange policy on some food imports pose a barrier to U.S. food exporters, it has opened a big window of opportunity for suppliers of agricultural equipment, mechanization and inputs required for crop, livestock and fish production, storage and processing. The government has set its sights on building an agribusiness economy capable of meeting domestic food demand goals, generating export revenues and creating jobs. As a result, it plans to continue supporting small holder farmers with farm mechanization and inputs.
For example, in 2018, the Ministry of Agriculture signed an MOU with John Deere for the supply of 10,000 units of farm tractors over a 5-year period. Private sector investments in the agribusiness value chain have significantly increased in recent years. Local manufacturers are now integrating farm production in their businesses due to the foreign exchange restrictions. Though state and federal governments remain the biggest buyers of farm equipment, the entrance of well capitalized private sector investors in the agricultural space is expected to further boost market demand for inputs. Nigerian farmers are very price sensitive and tend to favor cheaper, basic, easy-to-use-and-maintain farm machinery from Asia. Supplier credit and good local after sales support are excellent selling points U.S. exporters can apply to gain market share and increase competitiveness.
For questions, contact the U.S. Commercial Service in Nigeria. Email: firstname.lastname@example.org.