In recent years, the Nigerian Agricultural sector has benefited from varying policy directives from both the Federal Government (FG) and the Central Bank of Nigeria (CBN), as the sector led the way in the FG’s diversification plan. Despite favourable policies, the impact was not reflective on the overall sector output growth in 2018, which slowed greatly to more than a 4-year low of 1.2%y/y in Q2- 18, before rebounding to 2.5% in Q4-18.
The slowdown was predicated on the farmer/herder crisis that led to the destruction of crops and livestock, dragging growth in both sub-sectors.
Looking into 2019, we expect the Agricultural sector to continue to be at the forefront of Nigeria’s diversification plans, regardless of who wins the 2019 presidential election. With the general election less than a week away, cases of farmer/herder crisis have dissipated amid government intensified efforts to quell the crisis, but beyond the election, the Agricultural sector should remain a key driver of growth.
That said, we still highlight the long-term growth potentials of investing in the sector, given the country’s c. 2.6% population growth rate, c.60.0% unutilized arable land, weak mechanization rate, and fertilizer penetration. However, we note that for the sector’s potentials to be fully realized, adequate investments must be made across the entire agribusiness value chain in concert with supporting policies and structural improvements.
