Report Highlights: Total food and agricultural imports are estimated to reach $4.0 billion by end of 2011 from about $3.7 billion in 2010. Wheat from the U.S. accounts for more than 20% of Nigeria's total food and agricultural total imports. Exports of other U.S. agricultural products such as tallow, soybean/soybean meal, rice, dairy, fish and seafood products, tobacco and consumer-ready, are also significant. Nigeria's recent import policy and port reforms are encouraging more trade with U.S. exporters. This, along with economic growth and changing consumer demands, are expanding market opportunities for U.S. exports to Nigeria.
SECTION I. MARKET OVERVIEW
Nigeria is the largest market in sub-Saharan Africa with a population of more than 154 million people, and a population growth rate estimated at three percent annually. Petroleum exports account for about 20 percent of GDP, 95 percent of total export earnings and close to 85 percent of federal government revenue. Gross domestic product (GDP) growth fell to 3% in 2009, compared with 6% in 2008. This mainly resulted from the effects of global financial crises as well as reform programs in the country‘s financial sector in 2009. Driven by a recovery in oil prices, GDP is projected to rise to 4.4% in 2010 and 5.5% in 2011.
Despite the rapid growth of the oil industry over the years, agriculture still accounts for 33% of GDP and provides employment, both formal and informal, for more than 60% of the population. Crop production accounts for about 85 percent of agricultural activities, with livestock and poultry accounting for 10 percent, and fisheries and forestry, less than one percent. Major agricultural commodities produced in the country are cocoa, peanuts, palm oil, corn, rice, sorghum, millet, cassava (tapioca), yams, rubber, cattle, fish and timber. Nigeria‘s agricultural exports to the United States in 2010 increased to $64 million thru November, up from $62 million at the same time last year. This increase was mainly due to larger cocoa exports.
Despite the rapid growth of the oil industry over the years, agriculture still accounts for 33% of GDP and provides employment, both formal and informal, for about 60% of Nigerian‘s more than 150 million people. Nigeria‘s agriculture remains largely subsistence-based, with about 80% of agricultural output coming from farmers who live on less than a dollar per day and farm less than one hectare. Major agricultural commodities produced in the country are cocoa, peanuts, palm oil, corn, rice, sorghum, millet, cassava (tapioca), yams, rubber, cattle, fish and timber.
Nigeria is a huge net importer of agricultural products, with imports of approximately $3.7 billion and exports about $600 million in 2010. Imports are dominated by bulk/intermediate commodities such as wheat, rice and sugar. The United States is a substantial exporter of agricultural products to Nigeria, with exports estimated at approximately $800 million in 2010. Although U.S. exports are primarily wheat, exports of U.S. value-added and consumer-ready products have also risen in recent years. Major competitors for the Nigerian market are Europe, Asia, and South Africa. Nigeria‘s traditional trade links with Europe remain strong, and EU agricultural exports to Nigeria account for about 50 percent of the total. Imports from Asia, especially China, have grown markedly in recent years and investment from China in all sectors of the economy has experienced very rapid growth.
Nigeria is a long standing member of the WTO and is an active participant in CODEX and WTO committees. However, the country‘s powerful agricultural and industry interests have continued hamper GON‘s attempts at total trade liberalization. Hence, the country continues to pursue trade protection regime but remains under pressure to liberalize trade in conformity to its WTO commitments. In 2008, GON released a new tariff book for 2008-2012 that significantly liberalized imports— relaxing import restrictions on textiles, tooth picks, furniture and cassava products in 2010. However, some major agricultural products such as poultry products, pork and beef remain banned for export to the country. The new tariff structure is based upon the ECOWAS Common External Tariff (CET) four tariff bands of zero to 20 percent but with an unauthorized fifth band of 35 percent introduced to protect local producers.
The U.S. principal interest in Nigeria‘s agricultural sector is for the Nigeria to liberalize agricultural trade in compliance with its WTO agreement and also, to participate actively in addressing Nigeria‘s food security challenges. Despite some difficult challenges of doing business in Nigeria, U.S. exporters are encourage to explore to enter Nigeria‘s expanding market as Nigeria‘s huge population and improving democracy continue to offer rewarding market opportunities…
Prepared By: Marcela Rondon, Regional AgAttache & Uche Nzeka, Agricultural Marketing Specialist
Approved By: Russ Nicely, Regional Agricultural Counselor