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Presco Plc, the palm oil producer based in Edo State, is preparing to receive a $100 million (€85.9 million) capital injection from its Belgian parent company, SIAT NV. While the move looks like a standard capacity expansion on the surface, market observers point to the underlying driver being the unique economic appeal of Nigeria's palm oil sector. The investment, part of a wider plan that could reach $1 billion, appears calculated to capitalise on a specific "market premium" - a phenomenon in which local barriers to entry and foreign currency scarcity give domestic producers a significant pricing advantage over international competitors.
The rationale behind this massive capital deployment lies in the structural disconnect between global crude palm oil (CPO) prices and on-the-ground realities in Nigeria. With importers struggling to access dollars and facing steep logistics costs, domestic CPO prices have maintained a strong upward trajectory, trading at a premium to global benchmarks.
This environment has turned domestic production into a high-margin stronghold. A recent shift in governance reinforces this strategic decision: since March 2024, SIAT NV has been majority-owned (86.73%) by Saro Africa, a Nigerian holding company led by Rasheed Sarumi. By channelling funds through the Brussels-based entity back into Presco, the new Nigerian ownership has effectively doubled down on a market in which it controls the entire value chain, insulating operations from external supply-shock volatility.
Pricing Power Outweighs Currency Volatility
The validity of the bet on Nigeria's "market premium" is borne out by Presco's recent financial performance, which has shown notable resilience against macroeconomic headwinds. In the first nine months of 2025, the company reported revenue equivalent to €156.2 million, a leap from the €70.8 million recorded over the same period in 2024.
This growth of more than 120% (calculated in euro terms) suggests that the combination of strong volume growth and sustained high domestic prices has outpaced the naira's depreciation. With the domestic market accounting for 72% of its sales, Presco has demonstrated that strong local pricing power can effectively neutralise currency risk for investors.
Looking ahead, the fundamentals suggest this market premium will persist, justifying the scale of the proposed expansion. An update from Afrinvest West Africa forecasts 38.8% growth in pre-tax profits for sector leaders in 2025, driven by a persistent supply gap. Half of Nigeria's oil palm trees are more than 25 years old, and insecurity in rural areas continues to hamper smallholder production.
In addition, as global biodiesel demand shifts toward Asian supplies, pressure on domestic stocks remains elevated. In a landscape where demand outstrips supply and imports remain constrained, the $100 million investment looks like a strategic move to capture the long-term value of Nigeria's "red gold."
Source: Ecofin Agency