Yesterday, the National Bureau of Statistics (NBS) released Nigeria’s GDP report for Q2-2020. According to the report, the Agriculture sector which contributes c. 25.0% to real GDP was one of the 6 of 19 sectors to record y/y growth in Q2-2020. This was as the sector’s GDP growth slowed to 1.58% y/y in Q2-2020 (vs. 1.8% and 2.2% recorded in Q2-2019 and Q1-2020, respectively).
Notably, we suspect that restrictions in movement coupled with extension of planting season into Q2-2020 must have left an underwhelming imprint on the sector growth during the review period.
Looking ahead, we expect the Agriculture sector to stay resilient through Q3 and Q4-2020.
Specifically, we are of the view that the lifting of the ban on inter-state movement since July-2020 ease some of the supply chain bottlenecks which dragged the Q2-2020 performance. Also, given that Q4 is a seasonally strong quarter in the Agriculture sector amid harvest, we expect economic activities to further improve through H2-2020.
The downside to the above outlook remains the possibility of an underwhelming harvest season, due to COVID-19 induced disruptions during the planting season and lack of rainfall.
Also, we reiterate the need for Nigeria to invest in training and education of farmers, storage facilities, transportation network to facilitate movement of crops from farm to market, as well as R&D to boost Agricultural yield.