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The past decade has seen the Nigerian economic grow at unprecedented rates
becoming Africa largest economy and being one of the fastest growing global
The Nigerian food processing sector dominated by small, medium and as well as
multinational food companies. still undergoing development is gradually moving
steadily and setting the pace in the African markets with a projected output of $50.6bn
in 2020, The growth year-on-year for the industry in 2016 is projected at 10.5% CAGR
during next 4-5years to become home of African food manufacturers with massive
international and local investment shifting their attention to Africas largest economy.
The sector-wise break-up of Food Industry in Nigeria shows that Processed foods were
most consumed taking a lion share of 37.6%, followed by Protein 32.3% and cereals 30%.
Nigeria Food Industry has expanded at an unparalleled growth rate over the last five
decades. The market for processed foods has shown both multi-nationals and indigenous
food processing companies and fast food companies competing for unprecedented market
share in Nigeria worth USD 20.55billion in FY 2015. Growing at a compound annual growth
rate (CAGR) from 2015-2020 at +11.5 per cent annually, while the USD term is valued at
+4.7 percent (BMI), the Nigerian processed foods industry is likely to touch USD 50billion in
2020 with Nigerian diversification into Agricultural sector after several years of being oil-
dependent nation.
The Nigerian Food processing industry have the prospect and we believe can play a pivotal
role by driving improvement in the Nigeria economy in 2017 as the first organized Private
sector in Nigeria sustaining human life linking farm and the consumers together. The
Nigerian markets conditions has been forecasted to remain on upward trend in 2017 based
on affluent middle class with higher disposable income, growth of already large population
and rapid urbanization population particularly babies, children and young people driving
categories of baby food, confectionery, noodles, biscuit and dairy products. While the
market activities have been continuously heightened by marketing activities, technological
innovations by companies targeted at increasing Product value. Lastly, it is important to
note that food processing is a significant contributor to economic and social growth- with
high outputs ($20.55Billion in 2015), substantial employment generation (1.5 million
employees in organized and Small Medium Enterprise Segments), and impact on local
economies. Therefore, the food processing sector deserves the attention of all key
stakeholders in the government and private sector now that Nigeria is diversifying its
For the countrys Food processing industry currently suffering negative impact of economic
contraction with a result of 0.35% in Q1 and 2.05% in Q2 respectively, 0.18% in Q3 and PMI
shrinking of 2.9% in 2016 as result of fall in the exchange rate which makes manufacturing
inputs more expensive thereby increasing production and business cost, Nigeria would
need a 6 to 8 percent increase in food supply. By 2030, five factors will impact the
countrys food requirement, driven primarily by diversification to agricultural sector,
Industrial technological innovations, rapid urbanization and increasing income to cap with
more inclusive growth:
The Food and beverage holding 66% in 2016 while the beverage segment the
largest sector in the Nigerias food processing industry which include beer, soft
drinks, and juices account for 44% of the market share.
The Dairy the second largest segment posting 8% CAGR over the past three
years with USD2.02 billion in revenue generation.
Despite the success achieved by food processing industry in 2016, there are significant
risk to availability that need to be bridged by the Nigeria food industry in 2017, especially
fruit and beverages, Pulses and grain, diary, meat and poultry, edible oils products:
The fruit and vegetable market is driven by increasing awareness surrounding
health and nutrition. Juices provide a stiff competition in the face of Ready to
drink beverages, bottled water and sport/energy drink. Following a lull due to the
Nigerian economic crises, the juice market is expected to rebound led by natural
juices and refortified juices. Natural beverages are leading the market but the
food demand must not out-weigh the food supply for which may lead to
shortages resulting to high import dependency.
Pulses and grain segment will need to replicate thrice production growth output
to end the import substitution Policy of rice and wheat flour content in bread
with cassava flour, but with agricultural diversification Policy beginning in 2015
more Pulses and grains would need to be supplied before effecting the total
importation ban on pulses and grains. An inability to effect quantum
improvement of annual production output and yields could result in a shortfall of
food grains by 2030, leading to importation to meet the shortfall.
Rapid expansion and growth of dairy, meat and poultry segments has proven
that good government policies could revive back any dormant sector into vibrant
segment with active key players of the segments competing to have market
share thus having a positive impact on the Nigerian food industry, but high cost
of production may lead to domestic non- availability and prices affordability to
low- income consumers which may create fundamental threats necessary for
diary production.
Change in consumer preference/diet and rising income has driven up
consumption of edible oils, which is expected to substantially increase in the
share of energy intake. Though, Nigeria which is the second largest producer of
oilseeds just placed ban on edible oils importation. But a lucrative export and
insufficient markets demands by domestic edible oils manufacturer could pose
domestic availability which run the risk of shortages to consumers.
Resolving these issues centres around five pillars of my previous article Food value chain
Theory namely; availability, affordability, quality and safety. Hence, the approach needed
is a critical factor that would spread across the entire food value chain.
But essential Food value chain factors that would play essential role in improving Nigerian
Food Processing Industry in 2017:
Availability: Increase commercial viability of food production while leveraging public-
private partnership to enhance effectiveness, simplify the regulatory environment in
developing a consolidated policy for food and food processing and encourages
investment in R&D and technology to improve yields and reduce food waste with
implementation of effective skill development programs for food production.
Affordability: Helps to increase commercial viability of organized supply chains with
focus on high nutrition food products while ensuring transparency of price, volume,
and inventory in wholesale markets
Quality and Safety: Help the regulatory agency revamp the food safety laws by
focusing on enforcement and also create market demand through better awareness of
food quality and safety to consumer.
In summary, development of Nigerian Food Processing Industry is anchored on the
challenges of the sector namely: Food Production, Food Processing Quality and Safety,
Supply chain Infrastructure and Procurement and Consumers awareness.


Nigeria economy depends on and benefits from the economic activity (employment,
outputs and taxes) of food processing, as well as the impacts from the supply and
distribution chains that support this industry.
In 2015, Nigerias Processing sector was estimated to produce $22.55Billion in
economic output, including 45-50% direct economic and indirect economic impact to
overall market. The activities of the sector generated about 1.5 million jobs while the
sector is expected to grow at around 10-12% on a nominal basis and reach $50 billion
to $55 billion by 2020. Food and beverages is the largest segments, while the diary is
the second sector with grains and cereals, meat and marine, edible oils expected to
make significant growth.
The Substantial impact on the sector

With ever increasing demand for processed and packaged foods in the urban centres of
Nigeria, rapid urbanization and economic growth, ever-expanding middle-class
population and widen market structure that cuts across West Africa, has made food
processing plants more viable in Nigeria. This is reflected in urban resident
consumption of 76% of processed and packaged foods in 2016, while rural resident
consumption is 24%. With growth of grocery retail industry and food service fueling
consumption of processed foods.
Processed and Packaged foods includes ready-to-eat foods, snacks foods, healthy
and functional foods.
The Processed food industry has been dominated by ready to eat market. According
to a recent study, the Nigerian Ready-to-eat food market is expected to grow to
$250.7mn by 2016 from the current level of $102.3mn (2012-2013).
In Nigeria RTE food market, preservative, aseptic pouches and canned segment are
more popular contributing approximately 95% of market share and the CAGR is
growing at 70% derivative. RTE foods with longer shelving Food products without no
refrigeration contribute 65% approximately of the total market.
Ready-to-eat foods (RTE) are convenience foods, enclosed in aluminum container either
aseptic pouches or canned foil that only need to be cut open, consumed cold or reheated
before being served. RTE foods includes range of products viz. vegetarian/non-vegetarian
meals, basic food and delectable deserts. These may be canned or pouched foods. They
are many varieties but classified into two: Meals, Ready-to-eat (MREs), and direct, Ready-
to-eat (RTEs)
The difference in the Nigerian market is driven by demand and supply factors:
Consumption behavior. Nigerian consumer prefer to purchase more ready- to-eat foods
with rapid urban centers as well as the younger generation shifts towards processed foods
because of lack of time. This is distinct from many other countries where consumers prefer
to procure unprocessed and fresh food and then convert it into a consumable form through
the food preparation process either in homes or restaurants.
Technological advancement of Nigerian food processing sector. Recent agro-
processing and food exhibitions have re-invented the technological innovations and
advances in machineries and equipment, packaging materials and intermediate goods use
in the food-processing itself. With Nigeria processors capitalizing on this best opportunity to
build relationships with food machine manufacturers, enter an untapped market, build food
business profitability and form new business networks. Therefore,
Raw materials availability. Most agricultural raw materials such as tropical crops,
livestock that are used by food processors into finished consumable products such as milk,
fruits and vegetables are readily available nationwide in Nigeria hence there is not much
need for preservation and packaging of raw materials transportation over long distances to
industrial companies before they are processed.
1) Food Production:
Nigeria economy is an agrarian where agriculture has been described as the most
economic factor contributing to nations Gross Domestic Product having 41% share. With
Nigeria having 30.7million hectares (33%) land area. Agriculture is still on substience level.
With small farms contributing 80% of total food production. Average crop yield growth rate
for cereal, fruits, oils crops and tuber is 0.51%, 0.56%, 0.31% and 0.24% respectively
(UNCTAD). Food production has experienced average positive growth rate but recent food
trade deficit has grown by an average rate of 17.5% per annum which indicates Nigeria is a
Weak Net food importer( between negative 0-5% of GDP)(UNCTAD&WFI) attributed to Poor
Food Production and dependency on importation. The major constraint of Nigerias food
production are:
i.) Nigerian Agricultural Policy Reforms
ii) Nigerias Agricultural diversification
iii.) Nigeria Agricultural Productivity Decrease over the time
i.) Nigerian Agricultural Policy Reforms: An important part of any Food Production
agenda would involve the impact of agricultural policy reforms meant to improve the
incentives for farmers to increase food production by reducing domestic market
distortions. Nigerian Agricultural policy reforms aims attainment of self sustaining growth
in all the sub-sectors of agriculture and the structural transformation necessary for socio-
economic development of the country. Chances for success for some of the agricultural
policy reforms are most of the time enhanced by general macroeconomic and institutional
reforms. But Nigerian Agricultural sub-policies cover issues of labour, capital and land
whose prices affect profitability of food production systems; but implementation of
agricultural policy is, however moderated by macro-economic policies which provide the
enabling environment with other sectors.

ii.) Nigerias Agricultural Diversification: Recent Nigerias economy diversification from

Oil to Agricultural presents new opportunities to farmers to access new food markets,
produce for niche food markets and/or to move to higher value crops compared to what
they have traditionally been growing or produce for niche markets. This is particularly
true for farmers in areas with good agricultural potential. Even for those in less endowed
areas, Nigeria agricultural diversification can be used as partly a response to climatic
risk and to improve the level of their agriculture. The extent of diversification and its
potential can therefore be a good measure of transformation possibility in the
Agricultural sector.
However, it would be important to analyze Nigeria agricultural diversification possibilities
in terms of demand (internal, regional and export markets) and in terms of available
technical packages and possibilities that exist for Nigerian farmers in meeting the food
processing industry challenges which are agricultural raw materials and raising our
domestic deficit food production. It would be important to understand Nigerias farmers
technical capacity as a result of training in terms of seeds inputs of new crops,
machinery utilization/promotion of cooperative machinery ownership and utilization, and
government programs ensuring access to credit if not what is required in terms of
support for the farmer to bring them up to speed and to expand adoption of the
diversification crops. In order to provide the required support for the new areas of food
production, Nigeria Ministry of Agriculture and its policy makers should know if the
process of diversification requires any changes in food production methods in terms of
increasing levels of contract farming from small-holder to medium and/or large-scale
commercial farms. Also, large-scale de-facto consolidation and transition especially land
tenure and displacement of small holders from their lands to enable greater farm
investment should be supported by Nigerian government.

iii.) Agricultural Productivity Decrease over Time: Nigerian agricultural labor

and land productivity per worker has stagnated and in some cases even declined
with production increases coming mainly from area expansion . Its highly important
for the Nigerian government and agricultural Policy makers in this sector should
seek to understand why average crops yields and agricultural activities have
stagnated or declined over the last two to three decades. It is imperative to do an
analysis of the main factors that have affected crop yields and agricultural
activities understand the main binding constraints behind improving crops and
agricultural yields. Some of the constraints for adopting improved technology that
have to be looked at include; climate change impact, rainfall decline, deteriorating
soil quality, absence of modern inputs, lack of technological packages, lack of
agricultural advice, lack of investment (land, inputs) by farmers, and availability of
finance, and general risk aversion. Apart from these factors that affect the
production side, it will be important to look at demand for the products, such as
markets, pricing policy, and administrative and transport bottlenecks that
discourage farmers from selling their produce and hence limit their interest or
ability to adopt high yielding crop varieties and productivity enhancing methods of

2. Food Processing Quality and Safety:

Nigeria does have strong food safety laws and regulations with organizations (NAFDAC,
SON) that ensures that quality safe and standard foods are manufactured in/imported into
Nigeria. Despite their presence, there are major gaps and fallouts in food safety
implementation but a stricter compliance by food regulators in Nigeria can handle sheer
number of food players in Nigeria food chain which makes this organized food segment
implementation of quality and safety norms difficult. For example, many unregistered food
processing/companies operating within the Nigerian food value chain with lack of basic
facilities running unhygienic and safety practices. However, recent National Policy on Food
Safety and its implementation strategy is targeting some of these challenging areas but the
following factors are undermining Food processing Quality and Safety:

i.) Poor Unhygienic and safety Practices: Large presence of the unorganized sector
limits oversight into the standards processes followed from agricultural production to
processing and distribution. For example, Poor manufacturing sanitary conditions in some
RTEs packaged foods in Nigeria where there is no Good manufacturing Practices (GMP) such
as sanitation programs or Personnel training for an appropriate sanitation principles and
food handling practices, manufacturing controls, and personal hygiene practices like hand-

ii) High Adulteration: Adulteration is most notable in all spheres of Nigerian Processing
industry, A 2014 study shows how consumers are willing to pay more for food products with
safety label has increased than buying food products without no label to avoid adulterated
foods which may cause food-related illness. According to experts, strong evidence indicates
that the upsurge in reported cases of cancer, heart diseases, internal organ failures and
other terminal ailments is partly traceable to the proliferation of adulterated food items,
especially imported palm oil and fruits. Further study identified non-confirmity to food safety
standards in Nigeria is more than 25%

iii.) Abuse of Chemical Products: Recent survey in Nigeria shows several levels of
intermediaries, quality control of food is extremely difficult. For example, recent trends has
seen use of carcinogenic agents and calcium carbide used in accelerating ripening of fruits.

Food Private Players must operate under regulatory constraints in developing new high-
quality and safe products, yet generating demand often requires joint efforts by the
Nigerian food processing industry and other stakeholders to influence consumer behaviour
while Food regulatory agencies (NAFDAC, SON) must focus on implementation and
innovative solutions given the vast complexity in the Nigerian food chain.

3. Supply-Chain Infrastructure& Procurement

The increasing role of Food processing companies can help accelerate investment in storage
and transport capabilities thereby lowering wastage levels and enhancing the shelf life of
products, while food processing companies can deploy more scientific methods, innovations
in technology with adoption and application of modern technologies in the supply-chain
infrastructure and procurement. However, supply chain infrastructure is in adequate in
Nigeria, though recent Nigerian government incentives support new investment especially in
third-party logistics players in areas of cold-chain. Thus, food processing industry can play
role in building supply chain capabilities as their presence across the value chain will help
better the realization of improvement in supply-chain efficiency.
Higher involvement in procurement will also improve price realization for Nigerian farmers
by reducing intermediaries and thus lowering price buildup by eliminating non-value adding

Well-connected collaboration among retail players and logistics operators along with
Nigerian government support can effectively drive organization levels and efficiency of
supply chain. Nigerian government and its policy makers also need to play its part by
developing specialized functional models to support investment which may include private-
public partnership operating models, viability gap funding models, land-holding acquisition
and requirements. While Private players also have an important role in driving demand for
foods to make back -end infrastructure investment viable.
Nigerian Food processing industry will need to continue improving the quality and safety
compliance across their suppliers, logistics providers and retailers.

4. Consumers Awareness:

For consumers in Nigeria, access to safe and nutritious food is an essential requirement for
maintaining their overall health and well-being. Accordingly, food producers make
significant investments to ensure the safety of their food products and to reduce the risks
associated with consumer exposure to contaminated or unsafe foods. Producer efforts to
provide safe food can impact every aspect of the entire sourcing and production supply
chain, and represent approximately 14% of the total expenditures related to food
production. Consumer awareness is key fundamental importance because of food quality
and safety, most notably associated health-risk. Consumers appear to be willing to pay a
premium price for food products whose safety has been independently verified. Among
consumer study participants, food products that have been verified by a credible,
independent third-party as exceeding applicable government standards would command an
average 20% price premium over similar products. Educating consumer about the better
quality, safer goods intake in Nigeria can drive improvement while providing impetus for
back-end improvements in The Nigeria Food Processing Sector.


- Leverage Private-Public Partnership(PPP) to develop a consolidated Food

Production Policy
- Simplification of Food Regulatory environment for Nigerian Food Processing
Development of food safety and quality Policy as seen as strategic business
objectives which can contribute directly to improve Nigerias financial
- Increase Supply chain and procurement commercial viability
- Continuous Consumer education for food security