It is no secret that Nigeria is highly reliant on crude oil. The oil and gas sector accounts for about 10 per cent of Gross Domestic Product (GDP). Since the 2014 recession, economists have called for economic diversification and have appealed to the Federal Government to reform the agricultural sector.
The Federal Government, through the Central Bank of Nigeria (CBN), has issued several interventions like the Agricultural Credit Support Scheme (ACSS) to support the growth of the agricultural sector. Banks have also begun designing products for small-holder farmers and traders to assist them in the planting, harvesting, & storage of produce, in hopes to boost national food production and increase exports.
Food processing is very undeveloped and equally as important as farming. Food processing involves transforming agricultural produce secondary forms of food.
Food processing takes many forms such as grinding starchy foods to make flour for home cooking and applying complex industrial techniques used to make fast foods and convenience foods. Primary food processing is necessary to make most foods edible, and secondary food processing turns the ingredients into convenience foods, such as bread.
Nigeria’s food processing sector remains underdeveloped despite the large market potential. There are several opportunities and derivatives from food processing, i.e. bread, cereals, chocolate, snacks, healthy meals, and spices. These items make up 25% of the shelf space in supermarkets. Sadly, the country depends on imports to meet its demand for quality processed foods, and demand is also high for imported intermediate foods. There are several reasons for this, most notably the lack of funding to procure storage facilities, processing and packaging solutions that ensure prolonged shelf life, the high cost of alternative energy and the lack of knowledge on methods and standards required for proper food handling and processing. These issues have led to a lot of wastage and an increased reliance on foreign alternatives causing minimal developments in the industry.
In Nigeria today, relatively low-income level households spend a large portion of their incomes on food and non-alcoholic drinks. Staple food products have continued to report strong growth. Beer remains the main driver of growth in the alcoholic drinks sector, while a growing middle class will drive some growth in spirits and wine. Carbonated drinks are popular in Nigeria, but the growing café culture will drive growth in spending on hot beverages.
In November 2019, Euromonitor International reported that packaged food was one of the best performing industries in Nigeria at the end of the review period, despite the impact of the economic crisis earlier in the review period and declining consumer spending power between 2015 and 2019.
The average Nigerian spends 72.97 percent of his or her earnings on food with little for discretionary spending as detailed below:
|Total Food Expenditure||Beverages, tobacco||Bread, cereals||Meat||Fish||Dairy||Fats, Oils||Fruits/ Vegetables||Other Foods||% of total food Expenditures|
|% of total expenditures||2.73||34.08||12.88||15.22||5.61||5.15||15.44||8.89||72.97|
Agri-businesses and Agro-allied services can be laborious and often looked down on. Nigeria can harness her economic prowess through more interventions to assist the cottage industry through the training and skills development of citizens who can go on to become factory workers or employers of labour to serve our growing population.
However, opportunities within the sector must be thoroughly examined. For foodprenuers, it is advisable to understand the gaps in the market and the product demand before embarking on any agribusiness initiative. A feasibility study must be carried out along with an assessment of the required activities and machinery/equipment. Robust business plans must be developed to serve as a guide to attract investors who are interested in scaling the food processors financially and operationally.
For insight reports and feasibility study/business plan on agribusiness contact pcl. at email@example.com