Agriculture and Food Processing

Nigeria provides incentives for investments that are competitive on a global scale and offers a set of enablers for agribusiness investors. The support measures include regulations, tax-free structures, competitive and low-cost labor force and investment incentives. Nigeria has over 80 million hectares of arable land. This accounts for about 23% of arable land across all of West African sub-region. While oil may be Nigeria’s breadwinner, agriculture remains the most important component of the country’s economy.

Nigeria has highly skilled and efficient workforce. The labor cost is low especially when compared to American, Asian and European countries.

CONTRIBUTION TO GDP

At the moment, agricultural sector contributes 47 per cent to the country’s Gross Domestic Product (GDP) and is responsible for 10 per cent of its export earnings. Foreign direct investment inflows are currently at $6.1 billion and the GDP is growing at a rate of 7.71 per cent, making Nigeria the fastest growing economy in Sub-Saharan Africa.

Source: Nigerian Investment Promotion Commission

Nigeria is one of the world’s top producers of cash crops. The country’s agribusiness investment potentials exist in the following:

  1. Crop farming and plantation development:
  • TREE CROPS: Oil palm, sugarcane, cocoa, cotton, rubber, coconut.
  • CEREALS: Rice, wheat, maize, millet.
  • ROOT CROPS: Cassava, yam, potato.
  • LEGUMES: Groundnuts, soya beans, beans.
  • FRUITS: Tomato, orange, mango, pineapple, guava, banana.
  1. Food processing and preservation
  2. Livestock and Fisheries production

TOTAL INVESTMENT UNDER THE SECTOR

Major local and international investors are investing in Nigeria’s agriculture sector, with 5.6 billion USD in investments. The number of seed companies alone has risen from 5 to 80 within three years. The agricultural sector grew by 9.19% (year-on-year) in the third of 2014, up by 2.7% points from the third quarter of 2013. The agricultural sector grew by 38.53% between 3rd and 4th quarters of 2014, with crop production being the main driver, with a growth of 43.5%.

The Nigerian government has introduced various funding mechanism that will stimulate investments into the sector. The Nigerian Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) of the Central Bank of Nigeria (CBN) has reduced the risk in banks’ lending for farmers and reduced the lending rate to farmers. Banks are lending to agriculture today more than ever before. The share of lending to agriculture as a share of total bank lending expanded from about 2 per cent in 2011 to 5 per cent by 2013 and 9% in 2014.

Bank lending to seed companies and agro-input dealers expanded from $10 million in 2012 to $53 million in 2013 while bank lending to fertilizer companies expanded from $100 million in 2012 to $500 million by 2014.”

Others includes:

  • ₦787 million World Bank intervention fund to farmers
  • ₦50 billion mechanization support fund for agricultural equipment hiring enterprises;
  • ₦14 billion for the expansion of 2014 dry season farming.;
  • ₦10 billion rice processing fund
  • ₦500 million fund for cotton farmers

RECENT INVESTMENTS

  • A $5 Billion worth of investments in fertilizer manufacturing currently ongoing by Dangote Group, Indorama and Notore Chemicals.
  • Olam has invested $70 million in mechanized rice farm.
  • Dangote to invest $1 billion for large scale rice production
  • Teragro (a subsidiary of Transcorp Group) has established a $6 million plant to process oranges into concentrates.

Source: Nigerian Investment Promotion Commission

OVERVIEW OF INCENTIVES

Government has ambitious targets for the agriculture sector and the sector enjoys Pioneer Status with attendant tax exemption to all agro-allied companies. There are large investment incentives bagged by enabling laws and supported through the Ministry of Trade and Investments, Nigerian Investment Promotion Commission and the Ministry of Agriculture. For a complete list of the incentives, please click here.

Some transnational agro-allied companies doing business in Nigeria include Flour Mills, Dangote, Nestle, UAC (Tiger Brands), Olam, PZ Wilmar, Transcorp.