Holding a loaf of bread in one hand President Goodluck Jonathan extolled the virtues of cassava flour to an assembled audience of journalists and dignitaries at the Federal Executive Council in Abuja in November 2011. Nigerian bakers are being strongly encouraged to bake bread made with up to 40% cassava flour instead of wheat. Leading food manufacturer UTC is one of several firms now selling cassava flour bread.

EFFORTS TO LOWER IMPORTS: The move is a top-down strategy to reduce the import bill for wheat flour and develop a domestic production market for cassava. The country hopes to save some $1.63bn per year through the promotion of cassava flour and create over a million jobs by developing a new business chain from producers to marketers and distributors of the flour. Indeed, doubling production is expected to create 1.2m jobs, according to the Ministry of Agriculture.

With an overall food import bill growing at about 11% per year, and with wheat flour accounting for $410m of that total bill, the state is motivated to cut costs. Promoting cassava over wheat forms part of the new agricultural strategy. From July 2012 all equipment required to process and blend cassava flour will face no import duties. Importers of wheat flour, however, now face a 100% duty, with wheat grain attracting a 20% duty.

EXPANDING PRODUCTION: Focused subsidies are just one part of the cassava strategy. The state expects to achieve its targets through encouraging private investment in 18 large-scale industrial processing plants for cassava flour with a total capacity of 1.3m tonnes per year. These plants will be supplied by a huge expansion of existing cassava production facilities.

But what chance does the policy have of success? State officials are cautiously optimistic. “In the past, policy inconsistencies have affected private investment. In 2004 the government at the time under President Olusegun Obasanjo was keen for bakers and millers to blend cassava flour for bread making, but then under the next administration led by President Umaru Musa Yar’Adua in 2007 there was a switch of policy back to imports. We hope that the current policy will remain in place as it has clear benefits for the country,” Mustafa Bello, the executive secretary and CEO at the Nigerian Investment Promotion Commission, told OBG.

Others in the private sector agree. “There is now a strong push coming from the state, which is likely to create the necessary investment, and we are starting to see a number of businesses looking at cassava. There are two top processors of cassava flour now, but there needs to be a tipping point in investment where we start to see a critical mass developing. The policy could either take off or slip back depending on whether people see the financial benefits,” Jacques Taylor, the head of agricultural banking at Stanbic IBTC Bank, told OBG.

OPTIONS FOR DEVELOPMENT: The government’s new policy on cassava involves creating several business chains rather than purely producing and milling cassava flour. One option would be to develop cassava as feedstock for ethanol fuel. According to the state’s Agricultural Transformation Action Plan, Nigeria has adopted a policy of blending gasoline with 10% ethanol so there is potentially a domestic market representing 1bn litres per year of ethanol, which would require 50% of its feedstock coming from dried cassava chips. Under this plan 11m tonnes of cassava would need to be produced. There might even be the possibility of exporting to China. The report states that Chinese demand for dried cassava chips for ethanol production is expected to reach 12m tonnes per year by 2015/16.

Another option Taylor said might create the critical investment mass required is the development of high-fructose cassava syrup for sweeteners. The total sugar needs for soft drink and juice manufacturers in the country is estimated at 200,000 tonnes per year. Replacing half this with cassava sweeteners would guarantee an annual demand of 100,000 tonnes. Similarly, demand for modified starches is met by cornstarch imports, but the country’s two functioning starch mills have a combined capacity of 20,000 tonnes annually that could process cassava instead of imported cornstarch.