Cocoa Industry: A Sweet Opportunity for Nigeria’s Economic Diversification

Nigeria’s cocoa industry is becoming pivotal for economic diversification, with prices soaring and global demand rising. By December 2024, cocoa prices reached an all-time high, largely due to supply shortages and increased demand from Europe and Asia. Investments are flowing into the sector, creating opportunities for smallholder farmers and positioning cocoa exports to potentially exceed oil revenues in the near future.

Nigeria’s cocoa industry is becoming a critical element in the country’s economic diversification. With a surge in global demand and investments, cocoa is poised to rejuvenate Nigeria’s non-oil economy, especially as prices reached ₦15 million (approximately US$10,000) per tonne by December 2024, significantly outpacing earlier figures. This trend is driven by supply shortages and increased demand from major markets in Europe and Asia.

The Cocoa Research Institute of Nigeria (CRIN) has reported over a 700% increase in cocoa prices compared to January 2023, which indicates a significant revitalization of the sector. Oluwatobi Falegan, a financial expert, emphasized that the cocoa sector’s growth could positively influence other agricultural commodities and help restore Nigeria’s agricultural strength that diminished with the oil boom.

Recent investments highlight this shift as British International Investment (BII) announced a partnership with the Johnvents Group, committing US$40.5 million for enhancing production efficiencies and sustainability. This influx of investment is expected to improve the livelihoods of local farmers and bolster Nigeria’s trade dynamics in the global market.

Cocoa stands as one of Nigeria’s leading non-oil exports, predominantly farmed by around 300,000 small-scale farmers, and Nigeria ranks as the seventh-largest cocoa producer globally. Yet, contrary to its competitors like Côte d’Ivoire and Ghana, which process a substantial amount of cocoa, Nigeria mainly exports raw cocoa, missing out on vast market revenues within the chocolate industry.

This paradigm is slowly shifting as global shortages have directed attention to Nigeria’s cocoa exports. In 2024, cocoa constituted 7.12% of Nigeria’s total agricultural exports, marking it as a top-performing crop. Further data shows that during the same period, the oil sector’s contribution to GDP dropped to less than 5%, underscoring the rising significance of non-oil sectors like agriculture, which contributed 25.59%.

Dominic Joshua of Cultivate Africa conveyed that should the current trajectory continue, cocoa revenue could surpass oil revenues within the next decade, emphasizing a need for proactive measures now. Lessons from cocoa’s compliance with European standards could promote sustainable practices in other commodities and enhance Nigeria’s agricultural strategies.

In conclusion, Nigeria’s cocoa industry offers a promising avenue for economic diversification. With soaring prices and significant investments, the sector could contribute meaningfully to the national economy, providing new revenue streams. By leveraging this opportunity, Nigeria can reclaim its status in the global cocoa market and enhance its agricultural output, ultimately minimizing dependency on oil and bolstering economic resilience.

Original Source: www.independent.co.ug