Foreign direct investment (FDI) in Nigeria’s agricultural sector dropped significantly by 41% in the second quarter (Q2) of 2024, according to a BusinessDay analysis of the latest capital importation report. Investments fell from $10.01 million (N16.9 billion) in Q2 2023 to just $5.91 million (N10 billion) in the same quarter of 2024.
On a quarter-on-quarter basis, the decline was even steeper, with investment falling 63% from $15.80 million (N26.7 billion) in the first quarter (Q1) of 2024.
Experts attribute the downturn to ongoing insecurity affecting agricultural distributors. Abiodun Olorundero, managing partner at Prasinos Farm, explained, “Investors saw that they were not getting rewards for their investments in the sector, so they let it go altogether.” The agricultural sector has been severely impacted by banditry, kidnappings, and clashes between farmers and herders, causing many farmers to abandon their lands due to safety concerns.
Data from SBM Intelligence reveals that over 1,356 farmers have been killed in Nigeria in the past five years, particularly in food-producing regions such as the North-Central and North-East. The security situation has made it challenging for farmers to engage in agricultural activities, further jeopardizing food production and investment potential.
In the context of overall capital importation, the agricultural sector’s contribution fell to a mere 0.23% of total inflows, which amounted to $2.60 billion in the review period. Despite the decline in agriculture, total FDI in Nigeria increased by 152.8% year-on-year, rising from $1.03 billion in Q2 2023.
Olorundero also highlighted currency instability as a deterrent for foreign investors, stating, “Fluctuation of the naira has not helped the situation. The naira’s value has significantly declined, averaging N1,511.34/$ this year.” Under the Tinubu administration, the naira has lost approximately 70% of its value.
Chidinma Ezeh, team lead at FarmCAS, echoed concerns about the state of Nigeria’s agricultural sector, noting, “Nigeria’s agric sector is struggling.” Experts emphasize that addressing insecurity is crucial for attracting investment and ensuring food security in the country.