Agriculture | |
Agriculture | |
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Wednesday, February
17, 2021 / 10:23 AM / by United Capital Research / Header Image
Credit: Head Topics
Nigeria's
agriculture sector growth remained positive through 2020 but at a considerably
slower pace. Despite increased government attention, growth remained at a
low-single-digit level. Compared to a 5-year average growth rate of 3.0%, the
sector grew by 2.2% in Q1-20. However, the coronavirus pandemic's emergence and
the ensuing restrictions dragged growth in Q2-2020 as the crop production
sub-sector (over 85.0% of the sector) slowed to 1.4%. In Q3-2020 (+1.4%),
sector growth was further tapered as flooding, and low harvest yields impeded
output growth.
That said, we still highlight the long-term growth potential of investing in
the sector, given Nigeria's, c.60% unutilized arable land, weak mechanization
rate and low fertilizer penetration. However, we note that adequate investments
must be made across the entire agro-business value chain, with supporting
policies for age-long structural challenges, if the sector to be fully
realised.
Looking ahead, we expect the Agricultural sector to remain at the forefront of
Nigeria's diversification plan. Thus, we expect the Federal government to
sustain its fiat-led interventions in the sector to drive growth. We expect an
improved FG policy response, particularly on long-standing issues such as land
use, farming methods, and farming input quality. As the pandemic abates
globally and locally, we expect growth in the Nigerian Agriculture sector to
improve. In 2021, we anticipate annual growth of 2.5%, lower than the
5-year average growth rate of 3.0% due to overall instability in the key
food-producing states.
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