Danone’s $9.1M Investment Signals Confidence in Nigeria

Danone’s Strategic Investment in Nigeria’s Dairy Sector

In a move that defies the current trend of multinational companies exiting Nigeria, French food giant Danone has reaffirmed its commitment to the country by investing $9.1 million in a new yoghurt production line through its subsidiary, Fan Milk Plc. This investment comes at a time when several global companies have scaled back or ceased operations in Nigeria due to economic challenges as reported by BusinessDay.

The new production facility, located in Ibadan, Oyo State, was inaugurated in September 2024. It is equipped with state-of-the-art technology aimed at enhancing production efficiency and product quality. The facility will produce the FanYogo yoghurt drink, a popular product among Nigerian consumers.

Véronique Penchienati-Bosetta, Deputy CEO of Danone, expressed pride in the launch, stating, “This investment reaffirms Danone’s long-term commitment to the African market and our belief in the potential for growth in the dairy sector.”

Contrasting Trends: Multinationals Exit as Danone Invests

While Danone is expanding its footprint in Nigeria, several multinational companies have exited the market. In 2023, companies like Procter & Gamble, GlaxoSmithKline, and Unilever announced their departure from Nigeria, citing reasons such as foreign exchange challenges, inflation, and an unfavourable business environment. Procter & Gamble, for instance, transitioned to an import-only model, shutting down its manufacturing operations in the country.

Despite these challenges, Danone remains optimistic about Nigeria’s potential. Christian Stammkoetter, Danone’s President for Africa, the Middle East, and Asia, emphasized the company’s vision for growth in Nigeria, stating, “We are convinced about the potential of Nigeria.”

Strategic Partnerships and Local Sourcing

In addition to the new production line, Danone has entered into a strategic partnership with Obasanjo Farms Nigeria Limited to advance dairy farming and promote local sourcing. The partnership involves the development of a 2,500-hectare dairy farm in Iseyin, Oyo State. Fan Milk will import 100 pregnant heifers from Egypt, while Obasanjo Farms will provide 300 heifers within the first year. The farm is expected to double its capacity by the end of 2026.

This initiative aims to boost local milk production, reduce reliance on imports, and create employment opportunities, particularly in rural areas. Fan Milk will also provide training and technical capacity building for personnel involved in the project.

Economic Indicators and Business Confidence

Nigeria’s economy has shown signs of recovery, with the World Bank reporting a 4.6% year-on-year growth in the fourth quarter of 2024. This growth is attributed to fiscal improvements and reforms implemented by President Bola Tinubu, including the removal of petrol subsidies and the devaluation of the naira. However, the country continues to grapple with high inflation and foreign exchange challenges.

Despite these hurdles, Danone’s investment signals a renewed confidence in Nigeria’s economic prospects. The company’s focus on local sourcing and production aligns with the government’s efforts to boost local manufacturing and reduce dependency on imports.

Danone’s $9.1 million investment in Nigeria’s dairy sector stands out as a bold move amid a wave of multinational exits. By focusing on local production and strategic partnerships, the company aims to tap into Nigeria’s vast consumer market and contribute to the country’s economic development. This investment not only underscores Danone’s commitment to Nigeria but also highlights the potential for growth in the country’s dairy industry.