Nigeria plans to cover budget deficit by increasing palm oil exports

As crude oil prices continue to fall amid global trade tensions, Nigeria’s 2025 budget is under threat, prompting experts to urge the federal government to tap into its palm oil production capacity to cover the deficit. They say palm oil could be Nigeria’s next economic engine.

Nigeria’s crude oil production has fallen by about 32% daily, from 2.06 million barrels per day to 1.4 million barrels per day. Meanwhile, palm oil prices are rising due to rising global demand.

Despite Nigeria’s heavy dependence on crude oil, which accounts for 76% of its national income, the price of a barrel of palm oil now exceeds that of crude oil. While Brent crude is selling for $65.90 per barrel, palm oil is trading at $167.38, a price gap that leading palm oil producers are capitalizing on.

According to Business Day, the country’s two agro-industrial giants, Okomu Oil Palm Company and Presco Plc, posted their highest post-tax profits in a decade in 2024, despite inflation and the volatility of the naira, Nigeria’s national currency. Presco posted a staggering 4,088.7% growth in profits since 2015, while Okomu recorded a 1,188.3% increase. Okomu Oil’s revenue grew 73% and its post-tax profit grew 62%. Similarly, Presco reported a 217% increase in post-tax profits. Indonesia earned $28 billion in palm oil exports in 2021, while Nigeria earned $41 billion in crude oil but spent more than $500 million on palm oil imports, a significant gap that the government is counting on to revive the palm oil industry and plug the budget gap by prioritizing the tropical product over traditional hydrocarbons.

The push for agriculture is in line with broader regional trends. More than 70% of people in sub-Saharan Africa depend on forests and woodlands for their livelihoods, according to the United Nations Environment Programme, making reviving agro-industries like palm oil both an economic and social imperative.

Tags: Nigeria, palm oil