Oil dependence and Nigeria’s Palm Oil Sector

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The Problem Statement

Recall that Nigeria once ranked among the top Palm oil-producing nations globally and was a key exporter of the product.

However, underinvestment and decades of neglect have seen the industry production decline to a point where the country is now a net importer of the commodity.

However, it is inexcusable for Nigeria to be importing, given the presence of suitable weather, a large expanse of land and good soil conditions for the growth of palm oil. The neglect of palm oil produce and other cash crops is worrisome and difficult for the country to achieve its set targets of diversifying the economy from dependence on crude oil. disused infrastructures and non-budgetary allocation are major challenges faced in the Palm Oil Industry.

If Nigeria refuses to harness the full potential of the oil palm industry as an economic opportunity, it will continue to drop behind other global economies.

The Policy Solution

The Senate has urged the Federal Government to hasten its policies on the diversification of the economy to ameliorate the country’s foreign exchange profits. The call was made in resolutions reached by the Senate following consideration of a motion titled “Urgent need to revive the Palm oil Industry in Nigeria”.

It also called on the Federal Government to revamp the obsolete Nigeria Institute of Oil Palm Research (NIFOR) in Benin to enhance investment in research and production of quality oil palm seeds in the country for commercial production.

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NIGAC Constructive Position/Take

Palm oil is of strategic importance as it is used in the production of more than half of the products sold in supermarkets globally.

Used in food, cosmetics and as bio-fuel, worldwide demand for palm oil is robust. Indonesia remains as the market leader for exported palm oil.

Nigeria is the largest consumer of palm oil in Africa with a population of 197 million people (World Bank, 2018).

Global sales from palm oil exports by country totalled an estimated US$23.2 billion in 2019. Led by Indonesia, Asian countries generated the highest dollar worth of exported palm oil during 2019 with shipments valued at $19.3 billion or 83.2% of the global total.

In the early 1960s, Nigeria was the world’s largest palm oil producer with a global market share of 43%. According to the Central Bank of Nigeria (CBN), if Nigeria had maintained its market dominance in the palm oil industry, the country would have been earning approximately $20 billion annually from cultivation and processing of palm oil as at today. This would have greatly reduced our dependence on crude oil.

With falling oil prices, diversification has become inevitable.

There is an urgent need for the Government to introduce and promote policies which will revamp our agricultural sector and in extension, the palm oil industry.

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