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

Nigeria’s cocoa industry is rapidly evolving, boasting record-high prices and attracting significant investments, crucial for economic diversification. Cocoa prices surged more than 700% in 2024, driven by global shortages and increased demand. A recent US$40.5 million investment from British International Investment aims to enhance production efficiency. Cocoa’s export performance marks a shift in Nigeria’s economy, highlighting agriculture’s growing importance after oil, positioning the sector for future growth.

Nigeria’s cocoa industry is undergoing a significant transformation, emerging as a vital driver for economic diversification amid soaring global demand and record-high prices. The sector is set to bolster the non-oil economy, unlocking new revenue streams and enhancing Nigeria’s standing in the global cocoa market. By December 2024, cocoa prices surged over 700% since January 2023, peaking at ₦15 million (approximately US$10,000) per tonne, fueled by global supply shortages and rising demand from Europe and Asia.

These favorable developments in the cocoa sector could stimulate interest in other agricultural commodities, according to Oluwatobi Falegan, a Nigerian financial expert. He emphasizes that Nigeria’s rich agricultural potential, once the backbone of its economy prior to the oil boom of the 1950s, can be revitalized through initiatives in agriculture. Cocoa’s success serves as a model for other crops like cashews and sesame seeds, offering a pathway for economic recovery through diversification.

In a notable development, British International Investment (BII) has partnered with Johnvents Group, investing US$40.5 million to enhance production efficiency and sustainability in the cocoa sector. Benson Adenuga, head of BII’s Nigeria office, highlighted that this investment will benefit local farmers while bolstering Nigeria’s trade balance through increased cocoa exports.

Cocoa currently ranks among Nigeria’s most significant non-oil exports, predominantly cultivated by over 300,000 small-scale farmers across the southern regions. According to World Atlas data, Nigeria is the world’s seventh-largest cocoa producer, yielding around 270,000 metric tons annually, but it primarily exports raw cocoa beans, missing out on the value-added chocolate market.

While global competitors like Côte d’Ivoire and Ghana predominantly export unprocessed cocoa, Nigeria’s situation is similar, as it also exports around 90% of its cocoa in raw form. This has resulted in substantial losses from the lucrative global chocolate market, valued at US$130 billion. However, Nigeria is witnessing a gradual shift with an increase in production, pricing dynamics, and investment inflows, driven by global market shortages and disruptions.

Data from the National Bureau of Statistics (NBS) indicates that cocoa constituted 7.12% of total agricultural exports in 2025, ranking it as the top-performing crop. Key export markets include the Netherlands, Malaysia, Belgium, and Germany, reflecting a stabilizing demand. Notably, as the oil sector’s GDP contribution dipped below 5% in Q4 of 2024, agriculture surged to 25.59%, signaling a crucial shift in economic focus.

Dominic Joshua of Cultivate Africa observed that if trends continue, cocoa could potentially outpace oil in revenue generation within the next decade. Falegan posited that cocoa’s compliance with EU standards might encourage the adoption of sustainable practices across other crops, advocating for governmental support in agricultural sectors such as subsidizing inputs and improving logistics to reinforce agricultural exports.

The analysis highlights a pivotal transformation in Nigeria’s cocoa industry, showcasing its potential as a key economic driver amid declining oil revenues. The escalation in cocoa prices, growing investments, and rising export performance underscore the sector’s importance to Nigeria’s agricultural landscape. As cocoa paves the way for other agricultural commodities, the focus on sustainability and compliance with international standards may further enhance Nigeria’s agricultural competitiveness in the global market.

Original Source: www.independent.co.ug