With its population grown to more than two hundred million, Nigeria became the most populous African country, and it also has the largest economy in Africa.
Its GDP is now almost 40% larger than South Africa – which used to have the most significant African economy – and 20% larger than Egypt in second place.
On a global basis, Nigeria's economy takes 28th place, and despite the negative GDP growth it witnessed in 2020 as one of the effects of the COVID-19, it is expected to gradually improve its ranking to become the 17th largest in 2050, according to a report by CGTN (China Global Television Network).
In the ease of doing business, it is also ranked 131 among 190 economies, according to the latest World Bank annual ratings.
The rapid growth of Nigeria's economy is not accredited only to the oil sector. According to a World Bank survey, agriculture is one of the dominant industries and is the largest employer of labor and income-generating activity in Nigeria.
The food industry has developed well in recent years and is estimated to contribute 22.5% of the manufacturing industry value and 4.6% of the country's GDP. However, despite being a large and fast-rising economy, the challenges faced in the food sector, especially by entrepreneurs looking for startups in the industry, are enormous.
Some key trends from 2020, according to information from TradeDepot, a digital platform for the distribution of retail in Africa, give insights that consumer buying patterns shifted slightly towards more food items, with growth in purchase of food and essentials, as opposed to other categories. The pandemic influenced both manufacturers and consumers, as smaller packaging and lower-priced products were what consumers sought the most. Consumers are very price-sensitive and, as a consequence, are more drawn to lower price products.
- Insufficient innovation in storage.
- Getting the right recipe.
- Lack of qualified professionals/tech experts.
- Knowledge gap
- Raw material processing.
- Ignoring critical points.
- Lack of good linkages between research and the food industries.
— Poor innovations in storage
(I) Packaging and raw materials handling:
The manufacturers should determine the nature, properties, and characteristics of each raw material used in each production process before storing them. This would enable knowing the storage technique that is best for each material. Also, handling the raw materials should be done in a separate and confined space, free from all external materials that might affect the end results derived from the raw materials.
(II) Storage and handling:
The handling of food items is one of the most complex and essential parts of the food production business. The proper procedures must be followed to protect consumable items through the entire post-harvest process until it reaches the consumer.
Not all warehouses have the proper facilities/technology or know-how to ensure the appropriate handling of food items, so it is important to find a licensed food-grade warehouse that knows what they're doing to store your perishable food items. A good example of a warehouse to help with this is ColdHubs Ltd, Nig. It offers affordable prices for farmers, retailers, wholesalers, walk-in, solar-powered cold stations for 24/7 storage and preservation of perishable food. It adequately addresses the problems of post-harvest losses in fruits, vegetables, and other perishables.
— Getting the right recipe
A major problem is having the right recipe for whichever product you intend to produce. Consistency of product is key to retain customers. Getting the right person to help develop the recipe will help the business. The formula is key in product development, and when it isn't right, growth becomes a struggle.
A startup in the business can recruit experienced people (professionals) from other companies that are doing well to help develop their products and set up their factories.
The food production business is a very sensitive one in terms of ingredients. A mistake in the portion of a particular component can ruin a whole production run. Many food-producing companies are out there – top companies like Nestle Nigeria, Unilever Nigeria, Beloxxi Industries limited, Dangote Group, Dell Foods, UAC Foods – and the competition is quite high. One needs a unique ingredient to stand out. Some recipes have missing ingredients, faulty seasonings, insufficient or inadequate instructions causing more work, and some are not even tested. Food spoilage on customers' shelves can be a significant problem, especially when it persists, one could run into a huge loss that can eventually lead to closing down the business if the source of product spoilage isn't found as soon as possible.
— Lack of qualified professionals/tech experts
Most of the surviving Food Industries in Nigeria are owned and managed by foreign companies. There are qualified Nigerians that can handle these production lines, but some do not have sufficient technical know-how. These qualified Nigerians face challenges when managing their businesses. Training and innovation in technology would significantly improve the chances of these businesses being successful.
— Knowledge gap
Regular training of every stakeholder involved in the production processes should be a top priority of any organization. Quality should be everyone's priority. The gaps in supply chain infrastructures should be addressed and effective policies that would enhance quality positively should be in place. Training of the labor force is an essential component.
— Raw material processing
The industry needs to harness faster means of analytical processes on the raw materials and finished products. Rigorous processing of foodstuffs can reduce their nutritional value. This is where fortification with vitamins comes to replace lost nutrients.
Another challenge in the food industry remains proper handling and quality of the unprocessed raw materials, which requires innovative solutions. For example, Nestle plc provides its corn farmers with improved grain seedlings, thereby upholding the quality of their products.
— Ignoring critical points
Regulations and proper monitoring should be in place to ensure that critical control points are not bypassed irrespective of what happens, it should be corrected before production continues. Also, more CCPs (critical control points) should be in place at strategic points on the production lines to ensure that quality is maintained.
— Lack of good linkages between research and the food industries
A working relationship between research industries and food production industries will significantly benefit both sides and promote and improve growth commercially, financially, and educationally.
Private partnerships between research institutions, universities, and the food industry will help solve some of the problems associated with insufficient funding. (Binenbaum, Pardey & Wright)
The food industry is one of the fastest-growing industries in Nigeria and is vital to any country's economy.
Rapid growth has resulted in some structural challenges that entrepreneurs looking for a startup in the business will be forced to address.
Not least, because consumer demand constantly changes – our experience from the pandemic has shown this – and they will not tolerate poor quality or service.
This is particularly true as the country's rapidly expanding population's middle classes will demand higher quality goods and services.
Knowing what your consumers want and need and making sure you can provide them is essential to success in any industry.