Nigeria Agribusiness Q3 2018
Our view on the Nigerian agribusiness sector remains mixed but improving, with no downward revisions and with ourforecasts for rice, corn and sugar output and rice, wheat and corn consumption having been revised higher in this quarterly updatethe net outlook has improved. With Nigeria ranked as the world's seventh largest producer of cocoa, the crop assumes a greaterimportance in the country's medium-term economic future now that oil revenues can no longer be relied upon as an easy source offoreign exchange. We remain cautiously optimistic that cocoa plantations and processing facilities will continue to receive the publicand private sector support needed to move forward. Poultry, dairy, sugar, rice and wheat consumption are expected to continue todepend predominantly on imports to meet demand, though a much greater percentage of demand for each of these commodities(apart from wheat) could potentially be met by local production, although to achieve this goal it is likely that further investmentwould be required. In each case, consumption growth is expected to be weakened by the country's macroeconomic situation,particularly in the earlier years of our five-year forecast period. Poor infrastructure, lack of access to inputs and basic technology,fragmentation, and a lack of access to finance and expertise are among the factors that lead us to take a pessimistic view of themedium-term prospects for self-sufficiency. The added downside risks of currency weakness and the deteriorating food securitysituation in Borno state owing to the onslaught of the Boko Haram Islamist insurgency remain elevated, and while they do not yetmerit us revising down our forecasts for output significantly, they certainly weight on any potential upside potential in the sector.
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