As Nigeria’s economy continues to be weighed down by inflation and drop in oil revenue, a report has disclosed that investments in the Halal sector could generate $1.6bn annually to the economy in four years.
The report was produced by Dar-Al-Halal Nigeria, a consultancy company, in partnership with DinarStandard was launched yesterday in Abuja.
The report said Nigeria is the second largest consumer market in Africa with $1.7bn spent on halal products and services, thus, has a huge domestic market for investments.
It categorized the halal sector into six subsectors of food, fashion, pharmaceuticals, cosmetics, travel and tourism and media and recreation.
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“Nigeria has a strong agriculture and media sector base and a developing Islamic finance ecosystem globally. It is the largest producer of cassava in the world, producing over 19% of global production. Nollywood is the world’s second-largest film industry, which also opens opportunities for Islamic themed movies. Regionally, Nigeria is the largest sukuk issuer in Africa, and Lagos has become West Africa’s fashion capital.”
It stated that in terms of trade, Nigeria is the 11th largest exporter of halal products to Organisation of Islamic Cooperation (OIC) countries, within the African region and exported a total of $379 million in halal products (food, pharma, and cosmetics) to them.
It noted that with Islamic finance, the country has many opportunities to support the development of halal products and services.
“These include Shariah-compliant, traditional, and alternative working capital finance and business asset finance for SMEs. In halal products, Nigeria can boost its GDP by $1.4bn through incremental trade (export and import substitution) and an additional $124m million in FDI opportunity.”
“Nigeria’s exports of halal products to OIC in 2021 totaled $379m. Of this, $240m are products that require some degree of halal compliance in Muslim countries. This is 0.1% of the global halal exports to OIC. Almost 50% of OIC countries are from the African region. Nigeria exports US$59 million to these countries (1.4 per cent of African halal exports to OIC).”
It added that if Nigeria can increase its share of exports to OIC from 2 per cent to 6 per cent (mid-scenario) in the next four years, its exports to OIC can increase from $240m to $788m, boosting Nigeria’s GDP by $548m.
It said key products Nigeria should prioritize for exports include cocoa and cocoa preparations, meat and edible meat offal, sugars and sugar confectionery, live animals and animal fodder.
With Nigeria heavily relying on imports the report said that through decisive import substitution strategies and reasonably reducing these imports by 15 per cent (mid-scenario), Nigeria’s GDP would increase by $938m in the next four years.
For investment, it stated that If Nigeria can increase its share of global investments in the halal economy from 3 per cent to 10 percent (mid-scenario), its investments in the halal economy can increase to $1.1bn.
The report called for closer cooperation between industry players and the government to build a halal economy strategies and regulations to efficiently meet the local and regional demand for halal products and services.
“This would also attract investments from the region and globally, positioning Nigeria as a leader in Africa’s halal economy. The first priority should be the emerging sectors of Islamic finance and halal food, where further investment could help build scalable companies addressing robust domestic demand.”
