Nigeria is blessed with large tracts of arable land which makes agriculture an important sector of the economy with high potential for employment generation, food security and poverty reduction. Although the sector was largely dominated by subsistence farming, with improved seedlings, modern farming methods and better weather forecasting, agricultural yields have continued to grow.
These improvements have been driven by government policies which are aimed at encouraging more commercial and mechanized farming. These policies leverage Nigeria’s agricultural ecosystem to transform the country into a leading agribusiness and agro-allied industrial nation.
Agricultural sector contributes 25% of Nigeria’s Gross Domestic Product (GDP) and accounts for 48% of the labour force. The sector’s growth rate over the last 5 years averaged 4%. Crop production dominates the sector, accounting for 22.6% of GDP alongside livestock (1.7%), fisheries (0.5%) and forestry (0.3%).
Nigeria’s agricultural zones, which stretch from the tropical savanna in the north to the coastal rainforest in the south, and the mangrove of the Niger-delta complemented by tropical and semi-temperate weather prevalent across the country, promote the cultivation of a wide variety of agricultural produce from exotic fruits, vegetables, tree crops to root crops. Towards maximizing this nature’s gift, the government has mapped-out soil characteristics across the country and provides detailed daily reports on prevailing weather conditions.
The development framework for the sector is encapsulated in the Agriculture Promotion Policy 2016-2020, which itself built on the successes of its predecessor, the Agriculture Transformation Agenda 2011-2015. The policy document set out specific strategies for key stakeholders to build an agribusiness economy capable of delivering sustained prosperity by meeting domestic food security goals, generating exports, and supporting sustainable income and job growth.
The policy objectives for the sector include:
- Doubling the growth rate of the integrated agriculture sector thereby increasing the contribution of the sector to the national GDP;
- Significantly reduce food imports and become a net exporter of key agricultural products;
- Integrating agricultural commodity value chains into the broader supply chains of domestic and foreign industries, driving job growth, increasing the contribution of agriculture to wealth creation, and enhancing the capacity of the country to earn foreign exchange from agricultural exports;
- Becoming self-sufficient in tomato paste, rice, and wheat;
- Promoting the responsible use of land, water and other natural resources;
- Facilitating food security, food safety and quality nutrition; and
- Creating a mechanism for improved sector governance by the supervising government agencies.
The Nigerian agricultural sector is open to private participation and investment opportunities abound across the various value chains. Broad categorization of these includes:
- Mechanized crop production such as rice, maize, millet, cassava, sugar cane, tomato and the cash crops such as cocoa, palm kernel, rubber, among others.
- Food processing and preservation across the value chains of the sector
- Beef processing and packaging
- Fruit juice/canned fruits
- Beverages and confectionery
- Cash crop processing – rice, soybean, maize, cassava, cocoa, palm kernel, rubber, etc
- Exploitation of timber and wood processing activities
- Livestock cultivation – dairy and aquaculture (fisheries) development
- Horticulture development.
- Agricultural input supplies and machinery.
- Water resources development especially for irrigation and flood control infrastructure.
- Commodity trading and transportation.
- Development and fabrication of appropriate small scale mechanized technologies for on-farming processing and secondary processing of agricultural produce.
- Development of private irrigation facilities.
- Production of improved seeds and agro-chemicals.
- Production of veterinary drug, vaccine, chemical, feeds and feeds ingredients.
- Market Research.
Government has deliberately designed investment incentives to support private sector participation in the sector. While some of these incentives are in form of tax holiday, exemptions, and reliefs, there are many more that leverage on specific government policies, performance of the companies as well as relevant international investment treaties. Some of these are:
- Income tax relief for a period of three years and which can be extended for a period of one year and thereafter another one year or for one period of two years – Pioneer Status Incentives
- Zero Import Duty: Zero percent import duty tariffs (custom, excise and value added) for import of agricultural equipment and agro-processing equipment.
- Increased tariff with additional levy on any commodity that Nigeria produce (rice, starch, sugar, wheat, tomato etc.) to promote domestic production and local content.
- Exemption of interest from tax on loans granted to agricultural activities.
- Exemption from Value Added Tax (VAT).
- Access to Agricultural Credit Guarantee Scheme which is up to 75%.
- Avoidance of double taxation agreement which eliminates double taxation with respect on income and capital gains.
- Investment promotion and protection agreement provides reciprocal baseline protections for investments.
- Nigeria qualifies for the Africa Growth and Opportunity Act (AGOA).
Why You Should Invest In Nigeria
- Availability of arable land across the country including 3.14 million hectares of irrigatable land;
- Favourable weather conditions that support all-year-round agricultural activities;
- Known and mapped-out soil characteristics across the country to guide crop cultivation;
- Supportive government policy that is geared towards encouraging mechanized farming and agribusiness; and
- Huge demand gap between the supply of agricultural produce and the industrial activities.
Also read: Five Lucrative Businesses You Can Start In Nigeria Today And Make Big money
Source: Nigerian Investment Promotion Commission