Africa is blessed with the largest arable land on earth due to the comparatively lower rate of chemicalization and pollution of the natural environment. The Food and Agriculture Organization of the UN estimates that upto 60% of the world's arable land is in Africa, of which, large tracts are in Nigeria stretching 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. That makes agriculture an important sector of the Nigerian economy with high potential for employment generation, food security and poverty reduction.
Nigeria’s agricultural diversity promotes the cultivation of a wide variety of agricultural produce from exotic fruits, vegetables, tree crops to root crops. Although the Nigerian Agricultural sector was largely dominated by effective subsistence farming which thrived significantly by smaller region, modern farming methods and improved distribution infrastructure have paved way for commerialization on a larger scale. To maximize the economic potential of our natural vegetation, the government has turned to foreign science to map-out soil characteristics across the country and provide detailed daily report on prevailing conditions aimed at encouraging more commercial and mechanized farming to leverage Nigeria’s agricultural ecosystem to transform the country into a leading agribusiness and agro-allied industrial nation.
As a result, the Government's Agriculture Promotion Policy 2016-2020, preceded by the Agriculture Transformation Agenda 2011-2015, had achieved significant progress in meeting domestic food demands, generating exports, and supporting sustainable income and job growth. According to the Nigeria Investment Promotion Commission (NIPC), the 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%). Despite the symbolic progress, the Nigerian Government highly welcomes healthy investment in Agriculture to the policy objectives of:
- doubling the growth rate of the integrated agriculture sector thereby increasing the contribution of the sector to the national GDP;
- significantly reducing 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.
Agro-industrial ventures benefit from a five-year tax holiday, an agricultural credit scheme guaranteed by the CBN, subsidised fertilisers and zero import duties on raw materials used to make livestock feed.
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).
For more information, please refer to the Compendium of Investment Incentives from NIPC.
The 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 confectionary
- Cash crop processing – cocoa, palm kernel, rubber, among others
- 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 feeds and feeds ingredients.
- Market Research.
Other Reasons to Invest
- 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.