FG urged to tap oil palm opportunities to cushion budget shortfall

Business Day (24/04/2025) - As crude oil prices continue to fall amid global trade tensions, Nigeria’s 2025 budget has taken a hit, prompting experts to urge the federal government to tap opportunities in palm oil production to bridge the shortfall.

According to them, palm oil could become Nigeria’s next economic powerhouse—if the industry is properly harnessed.

Nigeria’s crude oil production has witnessed a daily decline of about 32 percent from 2.06 million to 1.4 million barrels per day. Meanwhile, palm oil prices are surging due to rising global demand, experts say.

Despite Nigeria’s heavy reliance on crude oil, which accounts for 76 percent of national revenue, the price of a barrel of palm oil now far exceeds that of crude oil. While Brent crude sells at $65.90 per barrel, palm oil is commanding $167.38—a price gap that top palm oil producers are capitalizing on.

Ndubuisi Ekekwe, professor and lead faculty at Tekedia Institute, underscored the rising global demand for palm oil in beauty products, detergents, food, and manufacturing, calling it “the new gold—except this one delivers real profits, not just valuations.”

“When you read the financials of Okomu Oil and Presco, you’ll understand where real value lies in Nigeria today,” he added.

According to BusinessDay, these two agro-industrial giants—Okomu Oil Palm Company and Presco Plc—achieved their highest after-tax profits in a decade in 2024, despite inflation and naira volatility. Presco recorded an astonishing 4,088.7 percent profit growth since 2015, while Okomu posted a 1,188.3 percent increase.

Intelpoint, a data research firm, reports that Okomu Oil’s revenue jumped by 73 percent, with profits after tax rising from ₦21.2 billion in 2023 to ₦34.3 billion in 2024—a 62 percent increase. Similarly, Presco posted ₦104 billion in profits after tax in 2024, up from ₦32.9 billion the previous year, marking a 217 percent leap.

Read also: Oil palm growers to replant 1.5m hectares on rising appetite

“Nigeria’s oil palm industry is making a comeback. With 1.5 million hectares set for replanting and global demand rising, the sector offers massive opportunities for agribusiness—from production to processing and supply chain,” it stated.

However, despite once being Africa’s leading palm oil exporter, Nigeria has fallen behind. Kalu Aja, Lead Consultant at the ECOWAS Commission, expressed concern over missed opportunities.

“In 2021 alone, Indonesia made $28 billion from palm oil exports, while Nigeria earned $41 billion from crude oil, yet spent over $500 million importing palm oil,” he said.

“Indonesia and Malaysia got their seeds from Nigeria. Imagine the revenue today if we hadn’t abandoned the industry,” he added.
Looking ahead, analysts warn that crude oil prices may remain under pressure. In January, Kelvin Emmanuel, CEO of Dairy Hills, told BusinessDay that former U.S. President Donald Trump’s plans to increase crude oil production by 3 million barrels per day could further depress global prices.

“My estimates are between $65 and $72 per barrel for 2025. The president may have to revise the $75 benchmark or prepare a supplementary budget by Q2 2025,” Emmanuel predicted.

“OPEC no longer has the leverage it once did,” he added, noting that cooperating non-members now outnumber full members.

Basil Abia, co-founder of Veriv Africa, sees an opportunity in ramping up crude oil production as a quick way to boost Nigeria’s revenue. “Right now, increasing crude oil output is the low-hanging fruit for Nigeria,” he said.

“Going the agriculture route is important, but it might take longer to yield significant results,” he added.
However, Adebayo Adeleke, founder of Supply Chain Africa, disagrees. He argues that crude oil isn’t a sustainable option in the long run. “The oil market is too volatile,” he explained. “Agriculture offers a more stable and sustainable path for the country’s economic growth.

Meanwhile, Nigeria’s government is signaling a pivot toward economic diversification. Jumoke Oduwole, Minister of Trade and Investment, recently emphasized the urgency of expanding non-oil exports.

“The Federal Government acknowledges the impact of the U.S.’s new 14 percent tariff on Nigerian exports,” she said. “While these developments pose challenges, Nigeria is committed to building resilience and accelerating export diversification.”

The push toward agriculture aligns with broader regional trends. According to the United Nations Environment Programme (UNEP), over 70 percent of Sub-Saharan Africa’s population depends on forests and woodlands for their livelihoods, making the revival of agro-industries like palm oil both an economic and social imperative.

Read more at https://businessday.ng/agriculture/article/fg-urged-to-tap-oil-palm-opportunities-to-cushion-budget-shortfall/