Palm oil business in Nigeria: Risk and requirements

Business ideas

As you know, palm oil business is a very lucrative and profitable business in Nigeria when you set up the right business plan. This is because Nigeria is one of the countries with the best quality palm oil. Not only that, palm oil can be used for cooking. Infact, 80% of soups made in Nigeria and beyond require palm oil product as an ingredient. It’s not all rosy as some may think.

This business just like any other business have many risk associated with it as you will see in this article. But one good benefits that comes with it is that foreigners outside Nigeria require palm oil not only for food but also also in the production of medicines, creams and other useful products. So, if you are in Nigeria, I think there are many opportunities for you to start and make money in palm oil business  whether in a small or large scale plan.

This business just like any other business have many risks associated with it as you will see below. In this article, I’m going to discuss some of the challenges you may encounter in the business.

In reality there are lot of loss posing as risk which is associated with this business and have to factor in before starting the business in order to have a perfect start-up palm oil business plan. Further, we will discuss how much you can use to start up and the profit opportunities in palm oil business. Before I go into the risk, I would like to segment the different plan of palm oil business and discuss their risk differently.

Risk in different plan of palm oil business in Nigeria

Small scale palm oil business plan: In this plan, you are either buying the palm oil from a region of production like Ondo state known for large scale production, then reselling it to make money

Or you have some palm fruits which are ripened, you harvest them and go to a processing center where someone will be paid to process it, then get a small quantity of palm oil in return and sell it to make money.
This type of palm oil business is very risky in the sense that you are not actually in charge of the entire oil manufacturing process. So, many times you may miss out on the profit opportunities in the business thereby running shortage which in other words means loosing money’s without reservations.

In the other hand, if you are buying to sale, during transportation, one story or another may be told about about the oil being transported and this would mean lose of money on your part too.

When it finally arrives too, you may have to start lowering the price for market women and individuals to afford it with ease, so if you are not careful, you may run some shortage on your part.

In addition, when you are ordering from a distant place, you are not certain whether sold and delivered to you is really best quality. And if it isn’t, customers won’t buy it and this entails loss or stagnant business growth on your part too. These are some of the risk associated with small scale palm oil business plan I can take for now. You need to factor in the above in your business plan before starting up so as not to miss out on the opportunities to make money in palm oil business.

Large scale palm oil business plan: In this plan, you are in full ownership, in other words  in charge of the business.

You own a company which buy palm fruits in a large quantity, then process it industrially and sale. There are more profit opportunities open for you in this plan in that you can also export them to foreign buyers and make money.

This type don’t have so much risk, but one of the most likely challenge here is unexpected fire outbreak which may probably cause great loses and fall of business.

These are some of the risk you really need to consider before venturing into palm oil business in Nigeria

Requirements to start profitable palm oil business

Below are all what you need to start a profitable and lucrative palm oil business in Nigeria  and make money whether it is small or large scale plan;

1. A piece of land for processing and packaging

2. Workers/labourers for operating machines and of the processing stage.

3. A shop or rented place for sales. This must be located near a market place or public place.

4. Building of processing house /company

5. Engage in practical business research

6. Capital for business setup

7. Contact of quality palm fruit supplies for large scale business/ quality palm oil supply for small scale.

8. Advertisement or awareness creation for customers.

9. Storage facilities

10. Mode of transportation of product


Cost of starting the business in Nigeria

You can use the calculations below to estimate how much you can use to start this business.

1. Cost of land will be about N1 Million–N5 Million depending on size and location

2. Hiring of labourers will cost about N200,000–N500,000 at start up

3. Renting of shop will cost about N100,000–N200,000 depending on size and location.

4. Building & construction of company with machines and equipments will cost about N5 Million–N10 Million

5. Advert can cost about N20,000–N50,000

6. Construction of storage facility will cost about N1 Million–N2 Million

7. Transportation logistics can cost about N3 Million–N5 Million.

8. miscellaneous estimated cost about N2 Million

Therefore to start a standardized large scale palm oil  business will you will use about N18 Million while a small scale palm oil business plan will cost you about N600,000 start-up. This is how much you can use to start the business.

How to start the business in Nigeria

To start a palm oil business in Nigeria, you must first decide which plan of Palm oil business you want to start–whether small or large scale, then examine the challenges involved in starting the business, make your plans, read through the requirements above. Most important, calculate the cost or expense, then start-up.

Examine carefully these 3 important factors– challenges, cost and requirements. These will help you to be successful throughout the business career and in due time, you’ll build a brand.


In conclusion, we’ve seen how lucrative and profitable palm oil business is in Nigeria and the various opportunities open to make money in the business, factoring the risk. For the fact that many people jump in without proper and adequate knowledge and jump out encountering great loses, we have considered some of the challenges facing the business. All the topics discussed in this article are important so as to be forewarned. Best wishes as you plan to start your business! 

Drop a comment if you would like me to write another article about how to start palm oil exportation business in Nigeria

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