Agriculture Sector: Nigerians, Investors Await Year Of Dividend

Chief Audu Ogbeh

To see an image of what a sector looks like in the economy, visit the capital market. This is what informed LEADERSHIP’s visit to the capital market which showed that the agriculture sector is hardly profitable for now and without any form of dividend.


For quoted companies like Livestock Feeds Plc, profit dwindled in 2015 from N402.15 billion in 2014 to N300.115 billion in 2015, and of course no dividend was paid. For Okomu Oil Plc, although profits rose from N1.90 billion in 2014 to N2.9 billion in 2015, the shareholders of the company went home downcast.

The situation has not been too different for the agriculture sector of the country which used to pay dividends to Nigerians in the 1970s. Its earning subdued the dollar to a lesser position, the pounds sterling was almost at par with the naira, and farmers were kings. But the advent of crude oil stole the show and Nigeria has not been better for it.

However, the minister of agriculture, Audu Ogbe, said that he is restoring the sector to its past glory where it paid dividend to investors and Nigerians generally. He noted that the waning price of oil, pressure to find other sources of revenue for government spending as well as the need to stabilise the economy from future external shocks has led to diversifying the economy from oil to agriculture. The sector on the Nigerian Stock Exchange (NSE) is not well presented considering that the NSE is the barometer of the economy.

A report by the Alliance for Green Revolution in Africa (AGRA) shows that agriculture accounts for roughly 41 per cent of the gross domestic product (GDP) in Nigeria and 50 per cent of the economically active population in the country.

There are currently five companies listed in the Agriculture Sector of the NSE and this sector accounts for N69.9 billion out of the total market capitalisation of N8.475 trillion as at April 11, 2016, representing 0.43 per cent of the total market capitalisation. The companies are FTN Cocoa, Okomu Oil, Presco, Ellah Lake and Livestock Feed Plc. Okomu Oil and Presco are the most performing stock trading at N31.25, N34.60 with year-to-date growth of 3.14 per cent and 4.85 per cent, respectively. FTN Cocoa is trading at its nominal value of 50 kobo, Ellah Lake is selling at N4.26 and Livestock Feed Plc at 94 kobo per share as at April 11, 2016. Agriculture has remained subsistent because the financing needs for agriculture is quite substantial and cannot be met through the money market, but this can be met with long capital sourced from the stock exchange, either through equity or bond market.

Recently, the chief executive officer of the NSE, Mr Oscar Onyema, at Presco’s Fact Behind the Figure, said that the capital market holds the ace for the agriculture sector to take its prime place in the Nigerian economy, saying, “The Nigerian Stock Exchange is the right platform to raise capital towards the growth and expansion of this sector.”

According to him, one of the reasons the sector has remained subsistent is because the financing needs for agriculture is quite substantial and it cannot be met through the money market.

“Taking into consideration the long-term nature of the sector as well as capital intensive disposition of the industry, the agriculture sector cannot rely predominantly on short-term borrowing,” he said.

According to him, the poor performance of the sector in terms of its contribution to the country’s total revenue has led successive governments to embark on and implement several agricultural policies and initiatives aimed at reviving the sector.

“It is a known fact that the capital market has a comparative advantage over other sources of finance in the provision of long-term funds compared to the generally higher cost of bank financing for long-term capital infrastructural projects,” he said.

Also, the Meristem analysts stated that the insurgency in the northern part of the country, poor nature of supporting infrastructure, and devaluation of the currency has negatively affected the agricultural sector in the years past.