Foreign investments in Nigeria’s agricultural sector have dropped to $59.17 million in the first six months of 2022, the lowest in five years, as insecurity remains a top concern for both local players and foreigners looking into the country.
Data from the National Bureau of Statistics show that $59.17 million of capital was imported into the agric sector in half-year 2022, down 74.9 percent from $235.87 million in the same period of 2018.
In the first three months of 2022, foreign investments in the country’s agricultural sector stood at $1.76 million, a 98.7 percent decline from $130.90 million in the same period of 2018.
“In Nigeria, we have problems in terms of safety,” Ibrahim Kabiru, national president of the All Farmers Association of Nigeria, said.
“All the parameters for investments are clear; you go to a country to invest because it is lucrative to invest there and you’re going to make money out of your investments. But Nigeria has fast become a country where there is no safety in terms of your investment. Even your personnel are not safe,” he added.
Insecurity issues have constituted a significant setback to agriculture, even though industry players say it remains the non-oil sector with the highest potential for foreign exchange earnings (and investments) in Nigeria.
Nigeria is currently grappling with security challenges, including farmer-herder clashes, cattle rustling, banditry, kidnapping, and Boko Haram insurgency.
In the North, where the bulk of Nigeria’s grain crops such as cowpea, sorghum, millet, soybeans and sesame, are cultivated, many farmers have been displaced. The rate and pace of terrorist activities in the country have made global headlines in recent times as this is one of the worst periods in terms of banditry attacks on farmers in Nigeria.
“It is just natural for foreign investors to slow down from investing in that sector because the news flow out there on farmers’ fate and their farm produce in recent months, are materially negative,” said Tajudeen Ibrahim, director of research and strategy, Chapel Hill Denham.
“There is no way you can generate returns when there is insecurity around your investments,” he added.
Other key players in the sector who spoke with BusinessDay are of the opinion that since agric investors mainly invest in the processing of agric commodities/raw materials that are available in the country, the rising operational costs also pose a challenge.
“Besides the banditry and insecurity menace in the country, the cost of running the plants is also a factor. Diesel prices have gone so high, and investors are discouraged if they are not breaking even,” said Victor Olowe, a professor and agronomist at the Institute of Food Security, Environmental Resources and Agricultural Research.
Many of the issues that culminate in the investors’ scare are also fundamental. “Investors don’t like such uncertainties,” Edobong Akpabio, chairperson, Agriculture and Allied sector group at Lagos Chamber of Commerce and Industry, said.
“Insecurity is the biggest factor. Other factors may include the high rate of foreign exchange, high cost of inputs, and decreasing purchasing power,” Akpabio added.
Industry experts say when the issue of insecurity is addressed and foreign investors’ fears are allayed, they will bring funds into the country to support the agric sector.