Agriculture

Is Agriculture Sector In 2021 Still A Growth Story?

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.

Covid-19 and planting season dragged Agriculture sector growth

Sources: NBS, United Capital Research

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.

Is Agriculture Sector In 2021 Still A Growth Story?

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.

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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.

READ: Konga Revitalizing Agriculture Sector In Nigeria Via E-Commerce

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