Breaking Barriers: The Future of Palm Oil Under AfCFTA

Palm oil, often referred to as Africa’s “red gold,” has long been central to West Africa’s economy, culture, and food systems. From Nigeria’s sprawling plantations to Ghana’s smallholder farms, palm oil is not just an edible commodity — it’s an economic lifeline. Yet for decades, the region has struggled to unlock its full potential in the global palm oil market.

Enter the African Continental Free Trade Area (AfCFTA), the world’s largest free trade agreement by membership. Covering 55 countries, a market of 1.4 billion people, and a combined GDP of over $3.4 trillion, AfCFTA is a game-changer. For palm oil producers in West Africa, it presents an unprecedented chance to break down trade barriers, increase competitiveness, and reclaim lost ground in global markets once dominated by Malaysia and Indonesia.

Nigeria: Sleeping Giant of Palm Oil Production

Once the world’s top palm oil producer in the 1960s, Nigeria now lags far behind. Today, Nigeria produces just 1.4 million metric tonnes annually, compared to Indonesia’s 47 million MT. The gap is staggering, but AfCFTA offers a reset.

• Opportunity: With tariffs reduced or eliminated within Africa, Nigerian producers could expand exports to regional markets like Ghana, Senegal, and Côte d’Ivoire instead of relying on imports from Asia.
• Challenge: High production costs, outdated milling technology, and land use issues still hamper competitiveness.

AfCFTA could incentivize cross-border investment in refineries and processing plants, creating a stronger regional value chain rather than exporting raw crude palm oil.

Ghana: Balancing Smallholders with Industrial Ambitions

Ghana produces around 375,000 MT annually, with more than 80% from smallholder farmers. Unlike Nigeria, Ghana has actively embraced policies to modernize production and attract private investment.

• Opportunity: Under AfCFTA, Ghana can become a regional hub for palm oil trade logistics. Tema Port is already one of West Africa’s busiest, positioning Ghana as a re-export hub.
• Challenge: Smallholders face productivity gaps — yields are just 2–3 MT per hectare, compared to 6–8 MT in Southeast Asia. Without major replanting programs, Ghana risks being outcompeted even within Africa.

AfCFTA’s frameworks for agricultural modernization could help channel investment into smallholder training, hybrid seeds, and sustainability certification — all critical for competitiveness in global supply chains.

Sierra Leone: Rising from Conflict to Agribusiness

Sierra Leone’s palm oil sector is smaller but growing, with annual production estimated at 150,000 MT. After years of civil war and instability, the sector is gradually attracting investment, particularly from companies looking for land for large-scale plantations.

• Opportunity: AfCFTA can allow Sierra Leone’s producers to scale exports to nearby ECOWAS countries without prohibitive tariffs.
• Challenge: Land rights remain a contentious issue, with communities often clashing with foreign investors. AfCFTA’s investment protocols may help standardize frameworks that balance community rights with foreign investment needs.

Liberia: A Sector in Transition

Liberia has a long history of palm oil, with companies like Sime Darby previously investing in industrial plantations. Today, the sector produces around 42,000 MT annually, with both industrial estates and smallholders playing a role.

• Opportunity: With its proximity to ports and membership in both ECOWAS and AfCFTA, Liberia can become a strategic re-export corridor.
• Challenge: Weak infrastructure and political instability slow investment. AfCFTA’s focus on trade facilitation could help reduce non-tariff barriers (poor roads, high transport costs) that keep Liberian palm oil from scaling.

Côte d’Ivoire: The Quiet Contender

Côte d’Ivoire, better known for cocoa, produces roughly 600,000 MT of palm oil annually, making it one of West Africa’s largest producers after Nigeria. Unlike others, it has a well-developed agro-industrial base.

• Opportunity: AfCFTA could help Côte d’Ivoire integrate its palm oil exports into regional food processing chains, especially for fast-moving consumer goods.
• Challenge: Competition with its cocoa sector for land and investment could slow palm oil’s growth. However, diversification into palm oil may be seen as a strategic move under AfCFTA.

AfCFTA’s Game-Changing Levers for Palm Oil

1. Tariff Reductions:
   Palm oil exporters in West Africa currently face tariffs as high as 35% within Africa. AfCFTA aims to slash 90% of tariffs, unlocking regional demand.
2. Non-Tariff Barrier Elimination:
   Delays at borders, inconsistent customs regulations, and poor transport links often add 30–40% to trade costs. AfCFTA protocols are designed to harmonize customs procedures.
3. Investment Facilitation:
   Regional trade can attract foreign direct investment (FDI) into mills, refineries, and plantations. This means West African palm oil can finally move up the value chain.
4. AfCFTA & Sustainability:
   With the EU planning restrictions on deforestation-linked imports by 2030, AfCFTA can help African producers standardize certification systems that prove sustainability — essential for global market access.

The Competition Factor: Malaysia & Indonesia

Even with AfCFTA, West Africa cannot ignore Asia. Malaysia and Indonesia control over 85% of global production. Their economies of scale and efficiency make them formidable competitors.

But AfCFTA allows West Africa to focus first on intra-African trade. For example:

• Nigeria currently imports nearly 500,000 MT of palm oil annually, much of it from Asia. Under AfCFTA, these imports could be substituted by regional producers.
• Regional demand across Africa is projected to reach 10 million MT by 2030, presenting a huge market before even considering Europe or Asia.

The Way Forward: Policy + Private Sector Partnership

For West Africa to seize the AfCFTA opportunity in palm oil, three things are essential:

1. National Replanting Programs
   Nigeria, Ghana, and Sierra Leone must invest in hybrid seedlings to double yields. Without this, production costs will remain uncompetitive.
2. Regional Processing Hubs
   Instead of exporting crude palm oil, West Africa should build refining hubs in Nigeria, Ghana, and Côte d’Ivoire. Value-added exports mean higher revenue and jobs.
3. Public-Private Partnerships (PPPs)
   Governments cannot drive this alone. Regional banks, private investors, and cooperatives must collaborate to leverage AfCFTA frameworks.

Conclusion: A Turning Point for “Red Gold”

AfCFTA is more than just a trade deal; it is a second chance for West Africa’s palm oil industry. If governments and private sector players embrace it fully, the region can reduce its reliance on imports, empower millions of smallholder farmers, and reclaim palm oil’s position as a cornerstone of African trade.

The next decade will determine whether West Africa remains a marginal player — or emerges as a competitive palm oil powerhouse within AfCFTA and beyond.