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Nigeria Food and Drink Report Q1 2008Published by: Business Monitor International Published: Mar. 6, 2008 - 31 Pages Table of Contents
AbstractDespite a difficult operating environment and persistent issues of corruption, Nigeria’s food and drinkindustry continues to attract investment from foreign operators, thanks to the industry’s vast untappedpotential, as discussed in BMI’s recently published Nigeria Food & Drink Report for Q108. An exampleof this is Swiss food and drink giant Nestlé’s decision to expand its production in the country. Accordingto reports in the local press, Nestlé is receiving support from the Ogun State government to expandproduction at its Agbara plant, located in the south-west, near the main city Lagos. According to Nestlépress reports, it is expected that this investment will further stimulate sustainable growth, increase thecompany’s market share and broaden the nutrition, health and wellness business platform for thecompany in Nigeria. Any such investments, and particularly those made by large multinationals, arewelcome news in Nigeria, given the country’s reputation as a risky place to do business. Nigeria is knownto suffer from widespread corruption, lack of transparency, political instability and the arbitraryenforcement of trade and investment regulations which have in the past limited its growth potential anddeterred foreign investors.Nestlé has been present in Nigeria’s food processing industry since 1961, with the Agbara factoryoperational since 1981. Nestlé produces baby food, confectionery and bottled water, and is a leader in thecoffee and cocoa markets. One of the reasons behind the company’s decision to expand its localproduction is surely the fact that cocoa is a major crop in Nigeria and it is the world’s fourth-largestproducer. Cocoa was Nigeria’s main export product in the 1960s, but with the discovery of oil, thegovernment began to neglect the sector, causing production to fall. Following the oil boom, which startedin the early 1970s, the economy experienced a major expansion. Yet despite being Africa’s largest oilproducer and benefiting from high global prices, more than half of the population still live in poverty,with economic progress undermined by deep-seated corruption and mismanagement. A few years ago thegovernment decided to refocus its efforts on cocoa production, with an ambitious project, the aim ofwhich was to triple cocoa production. Yet despite the major investments made, the project was notentirely successful, often because of widespread graft. Although most traders and farmers estimate thecountry’s cocoa production to be around 242,000 metric tonnes annually, as mentioned above, thegovernment claims that production is around 400,000 tonnes annually. In October traders and exporters in Nigeria’s cocoa market were complaining of a shortage of supply, dueto a low annual harvest. The low production was attributed to a number of factors, including poor weatherconditions, ageing cocoa trees and a failure of replanted cocoa to quickly produce new yields. However,in December the Cocoa Association of Nigeria reported that the outlook for Nigeria’s cocoa crop this yearappears to be more positive than originally anticipated, amending the expected harvest for the 2007-08season. Although the food and drink and agricultural industry will surely continue to face certainobstacles, these above-mentioned developments are positive signs for Nigeria’s food and drink industry. Get Full Details About This Report >> |
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