Palm oil is one of the most versatile and valuable agricultural commodities in the world today. Found in products ranging from food to cosmetics and biofuels, it has become a cornerstone of economic growth for several developing nations. Among these, Malaysia stands out as a remarkable success story. What makes Malaysia’s journey especially fascinating is that the oil palm tree — Elaeis guineensis — did not originate there. It came from West Africa, then, when the countries were not yet sovereign nations, from the same region where Nigeria lies. Yet today, Malaysia is one of the world’s largest producers and exporters of palm oil, while Nigeria, once a global leader, lags far behind. Understanding Malaysia’s path from importing palm seeds to building a multi-billion-dollar industry offers powerful lessons for Africa’s agricultural transformation.
The oil palm tree is native to the tropical rainforests of West Africa. It was an integral part of local economies and diets long before colonial times. In the 1870s, British colonial administrators introduced oil palm seeds from West Africa, specifically from Nigeria and the Congo Basin, to the Malay Peninsula. I must emphasise here that it was the British colonial authorities who introduced the oil palm seedlings into British Malaya, not Malaysia, as the country did not yet exist at that time. Ironically, the Nigerians often remind me of the narrative that Malaysia took or appropriated their commodity — a view with which I respectfully disagree.
Initially, the palm was cultivated as an ornamental plant in botanical gardens, not as a commercial crop. However, by the early 20th century, the potential of palm oil as an industrial and edible oil source became apparent. The first commercial planting took place in 1917 at the Tennamaram Estate in Selangor. The colonial authorities and early investors saw palm oil as a diversification strategy to reduce dependence on rubber. This strategic move marked the beginning of Malaysia’s journey to becoming a global palm oil powerhouse.
After independence in 1957, the Malaysian government faced a critical challenge, which was how to diversify its economy beyond tin and rubber exports. Palm oil presented an ideal opportunity. Through deliberate planning and investment, Malaysia transformed what began as a colonial experiment into a national development strategy. Key milestones included:
Government policy and land schemes: The Federal Land Development Authority, established in 1956, resettled thousands of landless rural families on newly opened agricultural lands. These smallholders were trained, supported, and provided with infrastructure to grow oil palm commercially. This policy simultaneously reduced poverty and expanded the country’s palm oil output.
Research and innovation: Malaysia invested heavily in research through institutions such as the Palm Oil Research Institute of Malaysia, established in 1979 (later merged into the Malaysian Palm Oil Board). Research led to higher-yielding varieties, mechanisation, better processing techniques, and more sustainable practices.
Private sector participation: The government encouraged private investors and local entrepreneurs to participate in the industry, creating a vibrant partnership between the public and private sectors. This collaboration ensured steady technological progress and efficient value-chain development.
Export development and global branding: By the 1980s and 1990s, Malaysia had become a global leader in palm oil exports. The government supported marketing initiatives to build international demand, while refining and downstream processing industries added value to the raw product.
Palm oil became much more than an agricultural success. It became a pillar of Malaysia’s broader industrialisation. Revenues from palm oil exports funded rural development, education, infrastructure, and industrial projects. The industry also spurred the growth of related sectors such as manufacturing, oleochemicals, and bioenergy. By diversifying its economy around a renewable resource rather than fossil fuels, Malaysia avoided the “resource curse” that affects many oil-dependent nations. Today, palm oil contributes significantly to Malaysia’s GDP, employs millions directly and indirectly, and remains one of the country’s top export earners. In 2024 alone, Malaysia exported around 80 per cent of its 19.3 million tons of crude palm oil production. The sector also contributed around 2.3 per cent to the GDP in that year and is a source of livelihood for one million individuals.
Nigeria was once the world’s leading producer of palm oil in the early 20th century. Nigeria stood tall, a position that brought economic prosperity to many regions of the country, especially the South-East. Unfortunately, over the decades, Nigeria lost that leadership to Malaysia and Indonesia, the two nations that ironically built their palm oil success using oil palm seeds originally brought by the British from West Africa. Among other factors attributed to it were the discovery of crude oil and poor government policies.
The discovery of crude oil in Oloibiri, Bayelsa State, in 1956 marked a turning point in Nigeria’s economic history. By the 1970s, oil revenues began to dominate national income, accounting for over 90 per cent of export earnings. As petroleum wealth flowed in, agriculture, including palm oil, was neglected. Government attention shifted to the oil sector, and agricultural policies received little funding or strategic direction. The easy revenue from crude oil created a “mono-product economy”, leaving Nigeria vulnerable to global oil price fluctuations and stifling agricultural innovation.
Unlike Malaysia, which has developed a long-term agricultural master plan, Nigeria’s policies toward palm oil were often short-term, reactive, and poorly coordinated. The regional cooperative systems that once supported smallholders were dismantled, and successive governments failed to implement effective replanting or modernisation programs. Land tenure issues also discouraged large-scale investments, while bureaucracy, corruption, and lack of infrastructure hindered private sector participation. Agricultural research institutions were underfunded, and the link between research and farmers was weak.
Several lessons, however, can be drawn from Malaysia’s experience:
Strategic government intervention: Long-term planning, land reforms, and consistent policies are essential for agricultural transformation.
Investment in research and development: Scientific innovation from seed breeding to mechanised harvesting is the backbone of productivity.
Empowerment of smallholders: Inclusive development ensures that rural communities share in the benefits, reducing poverty and inequality.
Value-added processing: Developing downstream industries transforms raw produce into finished goods, creating jobs and increasing foreign exchange earnings.
Sustainability and global standards: Malaysia’s emphasis on sustainable production and environmental stewardship has enhanced its international reputation, a model worth emulating.
Today, the oil palm industry is a pillar of Malaysia’s economic growth. For Nigeria and other African countries, too, they can revive their palm oil legacy and harness it for national development. On a positive note, Malaysia, through its private sector company, Agrinexus International, is currently managing Nigerian-owned plantations in Cross River, Ondo, and Delta States, and has already achieved higher yields and positive growth. The path forward lies in learning from Malaysia’s strategy and the Nigerian government’s continuous support and guidance, besides diversification, innovation, and investment in sustainable agriculture. The oil beneath the soil may fade, but the oil from the palm can once again fuel a nation’s prosperity if managed with clear vision and holistic purpose and steadfast integrity.
Ambassador Aiyub is a High Commissioner of Malaysia to Nigeria
