X-raying the Nigerian palm oil sector

Overview

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

Nigeria is the largest consumer of palm oil in Africa with a population of 197 million people (World Bank, 2018). The nation consumed approximately 3 million MT of fats and oils in 2018, with palm oil accounting for 44.7% or 1.34 million MT. In the same period, production stood at 1.02 million MT resulting to supply shortfall of 0.32 million MT (excluding possible impact of palm oil exports). 

In the early 1960s, Nigeria was the world's largest palm oil producer with global market share of 43%. Today, it is the 5th largest producer with less than 2% of total global market production of 74.08 million MT. In 1966, Malaysia and Indonesia surpassed Nigeria as the world's largest palm oil producers.

Since then, both countries combined produce approximately 80% of total global output, with Indonesia alone responsible for over half i.e. 53.3% of global output. 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.