Foreign direct investment into the agricultural sector dropped 41 percent in the second quarter (Q2) of 2024, according to a BusinessDay analysis of the capital importation report.
The report shows that investments into the agric sector declined from $10.01 million (N16.9 billion) in Q2 2023 to $5.91 million (N10 billion) in the same quarter of 2024.
On a quarter-on-quarter basis, investment in the sector fell 63 percent from $15.80 million (N26.7 billion) in the first quarter (Q1) of 2024.
“Insecurity issues affecting distributors of agro products have been a challenge,” said Abiodun Olorundero, managing partners at Prasinos Farm in an earlier interview.
“Investors saw that they were not getting rewards for their investments in the sector, so they let it go altogether,” he explained.
Nigeria’s agric sector has been heavily plagued by insecurity fuelled by banditry attacks coupled with cases of kidnap amongst the farming population and herders and farmers clashes.
Since the security situation became intense a few years ago, agricultural activities have been greatly impacted as farmers in Africa’s most populous country had to abandon their farmlands for fear of their lives.
Read also: Insecurity, flooding, others squeeze Nigeria’s food supply
Data by the research body, SBM Intelligence, notes that over 1,356 farmers have been killed within the last five years in the country, especially in food-producing states like the middle belt, North-Central, North-East and South-West.
Experts have stressed that for Nigeria to achieve food security and attract huge investment from foreign investors, the federal government needs to address the menace of insecurity, as this would encourage farmers to go back into farming, a move that would boost food production.
Owing to its steep fall, the agric sector contributed 0.23 percent to total capital importation of $2.60 billion in the review period.
“Fluctuation of the naira has not helped the situation. Instability of the naira has discouraged foreign investors from investing as the naira to dollar rate is not what it used to be,” Olorundenro said.
Naira, the country’s currency has lost about 70 percent of its value under Tinubu’s administration and averaged N1,511.34/$ at the Investors and Exporters window this year, according to data on the Central Bank of Nigeria’s website.
On a year-on-year basis, foreign investment into the country stood at $2.60 billion in the period under review, higher than $1.03 billion in Q2 of 2023, indicating an increase of 152.8 percent.
While on a quarter-on-quarter basis, capital importation fell by 22.8 percent from $3.38 billion in Q1 of 2024.
“Nigeria’s agric sector is struggling,” Chidinma Ezeh, team lead at FarmCAS, shared with BusinessDay in an earlier interview.
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