As of 2022, palm oil production in Nigeria was estimated to be 1,400 thousand metric tons, remaining stable compared to the previous year. In 2021, a growth rate of nearly 10 percent was registered. Overall, between 2010 and 2021, the palm oil crop in the country increased, reaching the highest growth in 2010, at 14 percent compared to the preceding year. Nigeria is one of the leading producers of palm oil worldwide.

Around 1.8 million metric tons of palm oil were expected to be consumed in Nigeria as of the 2021/2022 crop year. This represented a peak in consumption compared to the ten preceding years, indicating that the farm product is one of the major crops in the country with a growing domestic need. Most palm oil is for industrial purposes, while a smaller percentage is used by households.

In 2018, 350,000 metric tons of palm oil were imported into Nigeria. While this was a higher volume compared to the preceding year, it represented an overall decrease in imports of the product. For instance, in both 2013 and 2014, the country imported over 500,000 metric tons of palm oil. China and Malaysia were the main origins of palm oil imports in Nigeria as of the fourth quarter of 2021.

President Muhammadu Buhari has made the development of Nigeria’s agriculture a central part of his plan to cut the country’s food import bill, and reduce the reliance of Africa’s largest economy on crude oil sales.

But, while efforts to boost the production of palm oil — which is used for cooking and found in goods ranging from toothpaste to soap — have reinvigorated the local industry, they have also highlighted the challenges a new president will face when Buhari’s second term ends next year.

Nigeria was the world’s leading palm oil producer in the early 1960s. However, after focusing on crude oil exports in subsequent decades, it slipped to fifth and now mostly imports vegetable oil from Indonesia and Malaysia. Crude sales provide around half of all government revenues these days and most foreign exchange earnings. So, as part of a drive to reduce dependence on crude, the government has sought to return Nigeria’s palm oil industry to its heyday.

Just after Buhari took office in 2015, the government introduced a ban on the allocation of foreign exchange to importers of palm oil and 40 other products. Importers of crude palm oil also have to pay a duty of 35 percent.

Then, in 2019, the government unveiled a $500mn plan to increase funding to Nigerian producers through low-interest loans. The aim was to raise domestic output by 700 percent by 2027 while meeting local demand.

Domestic palm oil production grew from 1.03mn tonnes in 2017/18 to 1.26mn tonnes in 2020/21, according to the US Department of Agriculture. The USDA projects it will increase to 1.4mn tonnes in 2021/2022.

“Once they put palm oil on the list of those that can’t access forex, it triggered this need for domestic production,” says Chibundu Emeka-Onyenacho, sub-Saharan Africa research analyst at investment bank Renaissance Capital.

Emeka-Onyenacho adds that, whereas Nigeria imported about 34 percent of its palm oil in 2014, the figure has hovered at around 25 percent since the forex restrictions were introduced.