Government policies stifle Nigeria’s $621m bread market

Nigeria’s premium bakers say Africa’s most populous nation’s $621 million bread market has been struggling due to an unfavourable policy environment.

According to the Premium Breadmakers Association of Nigeria (PBAN), a population of over 180 million people and an estimated national population growth rate of 5.7 percent per annum and an average economic growth rate of 2.5 percent per annum in the past five (5) years means Nigeria has a large market for bread.

However, one of the biggest challenges facing the bread industry is government policies, which regulate importation of materials needed for the production of bread. For one, there is dissonance between government policies for the industry and the realities that major stakeholders that comprise bakers, face. For instance, the government charges 15 percent extra duties for wheat importation into Nigeria.

Audu Ogbe, the minister of agriculture, had claimed that the 15 percent extra duty is for the development of the local industry, for researching cassava production of cassava bread as well as growing for wheat. The idea is noble but it is difficult to see the sincerity in it as years down the line, government has little to show in terms of progress report on this policy.

Bread is a staple food in many homes in Nigeria. In fact, it is more ‘staple’ than rice, eba or any of the popular staples perceived as an exclusive preserve of Nigerians’ culinary culture. It is a ‘grab and go’ staple that goes with almost anything, that is why there is virtually no household in Nigeria where bread is not consumed.

The importance of this staple to a country like Nigeria can therefore not be overemphasised. For instance, at the heart of the French revolution in the 17th century, scarcity of two of the most essential elements of French cuisine, bread and salt, were at the heart of the conflict; bread, in particular, was tied up with the national identity.

Bread was considered a public service necessary to keep the people from rioting and bakers, therefore, were public servants. According to Sylvia Neely’s A Concise History of the French Revolution, the average 18th-century worker spent half his daily wage on bread. However, when the grain crops failed two years in a row, 1788 and 1789, the price of bread shot up to 88 percent of his wages. Many blamed the ruling class for this among other factors, and that culminated to the French Revolution.

Like France, the market for bread in Nigeria is national. With government’s drive for diversification, this industry is one key driver. A KPMG report released two years ago placed the rate of its growth at 72 percent and its worth at $621 million market value which is expected to keep growing pari passu the population.

Apart from producing one of Nigeria’s staple foods, the bread industry creates jobs-those directly employed by the industry, armies of bread distributors, sellers and hawkers all over the streets.

It has reduced national unemployment in the country by a wide margin. Information gathered from PBAN alone has it that over 700 thousand people are gainfully employed in the premium bread sub sector of the industry both directly and indirectly.

Notwithstanding the above, several factors have over the years, been plaguing the profitability, viability and survival of the industry. Should nothing urgent be done about this and the status quo remains for longer, a ‘bread revolution’ may be upon us soon. Premium bakeries are going under every day due to the unbearable cost of production.

Government should take another look at the 15 percent extra duties on wheat and see how to bring it down considerably to assist in driving down the price of wheat which is the major ingredient in flour production.

In the last five years also, the price of raw materials for making bread has been on the steady increase with flour increasing by over 150 percent. Sellers of these raw materials can afford to hike their prices in demands to market forces but the premium baker is not as dynamic.

Another major challenge of the industry is glut, saturation of that space with too many players. For outsiders without much insight into the industry, the business of bread making is looking very lucrative. This explains the many bakeries-both certified by and non-certified by NAFDAC-in all nooks and crannies of the country.

Closely related to this, is the activities of unregistered, unlicensed and undocumented producers of bread, who are not under any obligation to adhere to NAFDAC health and other safety standards.

The PBAN holds that these unregulated bakers pose a risk not only to regulated bakers but to the last consumer, as well. They produce cheap, but poor quality bread with unwholesome baking material like potassium bromate which is injurious to health and cancerous; nonetheless, attract high patronage because of their low prices.

IFEOMA OKEKE