Nigeria’s Milk Paradox: $1bn Deal With Uganda Rekindles Dairy Debate

Nigeria has struck a billion-dollar milk import deal with Uganda, reopening uncomfortable questions about why Africa’s largest cattle owner still relies heavily on foreign dairy to feed its population. Valued at about $1 billion (roughly ₦1.45 trillion), the agreement will see Uganda supply Nigeria with an estimated 200,000 tonnes of powdered milk, with shipments expected to begin before the end of the year.

Source: annammilk

The deal is Uganda’s biggest dairy export agreement to date and comes at a time when Nigeria’s dairy demand continues to outstrip local supply. Milk powder will be shipped from Entebbe to Lagos to help bridge the widening gap between consumption and domestic production. Yet the irony is hard to miss: Nigeria has an estimated 20 to 21 million cattle, far more than Uganda’s 14.5 million, but produces only a fraction of the milk.

Uganda churns out nearly four billion litres of milk annually, while Nigeria produces barely 600,000 to 700,000 tonnes, against a national requirement of up to 1.7 million tonnes each year. The shortfall has forced Nigeria to import about 60 percent of its dairy needs, costing the economy more than $1.5 billion annually and placing persistent strain on scarce foreign exchange.

Industry experts warn that the flood of imported dairy products has steadily eroded local production. Nigerian dairy farmers, operating with minimal government support and poor infrastructure, struggle to compete with subsidised European milk powders, many of which are cheaper on the shelves. As a result, several local farms have shut down, sold off assets or redirected investments to other sectors.

Analysts say the contrast between Nigeria and Uganda exposes structural weaknesses rather than a lack of resources. Uganda has invested consistently in improved cattle breeds, modern dairy farms, processing plants, cold storage and export logistics. Nigeria’s dairy system, by comparison, remains largely traditional, with low-yield cattle producing as little as one litre of milk per day.

For Uganda, the Nigeria deal promises hundreds of millions of dollars in export earnings and a more stable market. Officials say it also reflects a strategic pivot away from unpredictable regional buyers such as Kenya, which has frequently imposed import restrictions. Nigeria, they argue, offers scale and certainty. “We now prioritise partners who open markets, not close borders,” a senior Ugandan official said.

Back home, economists argue that investing even a fraction of Nigeria’s annual dairy import bill into improved breeds, ranching systems and cold chain infrastructure could transform the sector. Beyond food security, they warn that rising imports worsen foreign exchange pressures, undermine rural livelihoods and indirectly fuel land-use conflicts linked to grazing.

While isolated successes in states like Adamawa show that modern dairy farming can work in Nigeria, progress remains slow despite recent livestock reform initiatives. For many observers, the Uganda deal is a stark reminder of a deeper failure. As one analyst put it, Nigeria should not be importing milk from countries with fewer cows — and the cost of inaction is growing by the year.