Livestock production

Livestock production

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Livestock production

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Agriculture
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
> 25% (in ROI)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
> USD 1 billion
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
USD 500,000 - USD 1 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
No Poverty (SDG 1) Zero Hunger (SDG 2)

Business Model Description

Raise livestock and produce livestock products, such as poultry, eggs, cattle, dairy, pigs

Expected Impact

Help improve livelihood prospects for smallholder producers.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Region
  • North West
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Food and Beverage

Development need
About 25.5% of Nigeria’s population lacks adequate and improved nutrition.(1) Similarly, data from the National Bureau of Statistics suggests 26.4% of the population experienced severe food insecurity in 2016.(1) The Sustainable Development Report ranks Nigeria number 48.0 for SDG 2 (Zero Hunger). While performance against this Goal has improved, major challenges persist.(2)

Policy priority
The government intensified efforts to improve agricultural yield, and investments aim to improve agricultural infrastructure.(1) Policy priorities outlined in the Economic Recovery and Growth Plan aim to: increase agricultural GDP (gross domestic product) to NGN 21.0 trillion in 2020 at an average annual growth rate of 6.9%; reduce food imports; and become a key exporter of agricultural products.(3)

Gender inequalities and marginalization issues
Agriculture and trade account for the majority of Nigeria's employment opportunities. Most people in these sectors work informally (92% of those employed in agriculture, and 56% of those employed in trade), and so rely on daily wages. Generally, informal workers have no pension or life insurance, and have limited health insurance coverage. They are more exposed to shocks, especially to their health, and are vulnerable to poverty and hunger. Micro, small and medium enterprises (MSMEs) are most likely to be affected by the upcoming recession, and will take longer to overcome the economic impacts of COVID-19.(4)

Investment opportunities introduction
The government is also considering strategies such as providing irrigation infrastructure to enable year-round production to boost agricultural productivity.(3)

Key bottlenecks introduction
The Sustainable Development Report ranks Nigeria number 48.0 for SDG 2 (Zero Hunger). While performance against this Goal has improved, major challenges persist.(2)

Sub Sector

Food and Agriculture

Development need
In 2018, agriculture accounted for 21.2% of Nigeria's GDP (gross domestic product) and employed two-thirds of the working population.(3) Indicators of adult obesity have improved, while indicators of undernourishment have underperformed. Prevalence of stunting in children is falling.(4)

Industry

Meat, Poultry and Dairy

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Livestock production

Business Model

Raise livestock and produce livestock products, such as poultry, eggs, cattle, dairy, pigs

Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

> USD 1 billion

The Delta State Agro market, for example, has the potential to scale rapidly to over 1 million hectares by 2023, creating an investment potential of nearly USD 40 billion (NGN 14 trillion) and an annual revenue opportunity exceeding USD 6 billion (NGN 1.5 trillion).(6)

Projections suggest poultry meat, beef and milk consumption will grow by 253%, 117% and 577%, respectively.(7)

Indicative Return

ROI
Describes an expected return from the IOA investment over its lifetime.

> 25%

Estimates from active investors indicate the following annual returns on investment (ROIs): 14%-20% for poultry and egg farming (8); 24%-30% for cattle (8); up to 40% for dairy (9); and up to 32% for pig farming (10).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Short Term (0–5 years)

Investments in livestock production are short term and could create stable cash flow in 3-5 years. Poultry and eggs will typically take 3 years, while cattle and dairy farming will take 4-5 years.

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

USD 500,000 - USD 1 million

Market Risks & Scale Obstacles

Capital - Limited Investor Interest

Agricultural financing is generally considered a risky investment. NIRSAL (the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending) is minimizing the risk of agricultural lending via its anchor borrowers programme.

Business - Supply Chain Constraints

Inadequate infrastructure

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

As a result of Nigeria's rapid population growth, demand for livestock products is expected to increase exponentially. Different projections suggest poultry meat, beef and milk consumption will grow by 253%, 117% and 577%, respectively.(11)

There is an urgent need to substantially increase production of food and livestock to meet the increasing demand across the country. Boosting Nigeria's livestock will not only increase supply, but will positively affect lives and livelihood.

Gender & Marginalisation

Long term efforts to improve women's access to agriculture and livelihood resources (including land, agricultural inputs and education) requires tackling cultural and gender norms that prevent women’s empowerment. Anecdotal evidence shows women are less likely to gain access to credit, land and other agricultural inputs.(16)

Expected Development Outcome

Investments could increase the production of dairy products, transfer improved breeding technology and create employment opportunities for youth.

Investments could also increase food security and nutrition, decrease levels of malnutrition and increase levels of protein intake.

Gender & Marginalisation

Economic Recovery and Growth Plan (ERGP) 2020 target for female population that owned agriculture: 80.8%. SDG target by 2030: 100%.(17)

Primary SDGs addressed

No Poverty (SDG 1)
1 - No Poverty

1.1.1 Proportion of the population living below the international poverty line by sex, age, employment status and geographic location (urban/rural)

1.2.1 Proportion of population living below the national poverty line, by sex and age

1.2.2 Proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions

Current Value

62.6% of Nigeria's population live below the international poverty line: 69% of people in rural areas live below the international poverty line, compared with 51% of people living in urban areas.(16)

46% in 2018. (18)

42.2% in 2017. (16)

Target Value

The Federal Government is implementing a national Social Investment Programme which focuses on providing Social Safety Nets for the poor, welfare for the unemployed, and job creation and skills enhancement with a target of creating about 3 million jobs.(16)

21.1% by 2030. (16)

Zero Hunger (SDG 2)
2 - Zero Hunger

2.1.1 Prevalence of undernourishment

2.1.2 Prevalence of moderate or severe food insecurity in the population, based on the Food Insecurity Experience Scale (FIES)

Current Value

25.5% in 2015.(17)

Moderate: 26.4%. Severe 19.6%.(17)

Target Value

Derived ERGP (Economic Recovery and Growth Plan) target by 2020: 17%, by 2030: 0. (17)

Derived ERGP (Economic Recovery and Growth Plan) target by 2020: 17.6%, by 2030: 0. (17)

Directly impacted stakeholders

People

Smallholder farmers

Corporates

Commercial farmers, industry offtakers

Indirectly impacted stakeholders

Corporates

Input suppliers, animal health service providers, processors, wholesalers, retailers, investors

Outcome Risks

Investments may cause disease outbreak and air pollution.

Bad management and lack of regulations could result in high greenhouse gas emission levels, land degradation, water and soil pollution and increased biodiversity loss.

Impact Risks

Unexpected impact risk given the negative effects of agricultural production especially on biodiversity.

Stakeholder participation risk given land use issues may come up after agricultural production reaches large scale.

Alignment risk given production may not be locked into an enterprise model.

Impact Classification

B—Benefit Stakeholders

What

Outcome is likely to be positive as investments in livestock production could potentially increase productivity, increase employment opportunities and income of farmers.

Who

Small and medium scale farmers, commercial farmers, general population.

Risk

Disease outbreak and antimicrobial resistance makes some diseases difficult to treat in some animals.

Impact Thesis

Help improve livelihood prospects for smallholder producers.

Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

The Agricultural Policy of Nigeria: This policy highlights the government's interest in increasing livestock productivity across the country.

The Agricultural Promotion Policy and the National Livestock Transformation Plan: These documents are guiding the transformation of the livestock sector up to 2027.

Financial Environment

Financial incentives: Companies engaged in wholly agricultural activities are entitled to an unrestricted capital allowance.(12) Funding for agricultural value chain development (USD 178 million for palm oil) is available via the Central Bank of Nigeria.

Fiscal incentives: Section 33(3) of the Companies Income Tax Act (CITA) exempts the income of a company engaged in agricultural trade from paying minimum tax. (13) Zero tariffs are extended for importing agricultural equipment and agro-processing equipment.

Regulatory Environment

Act No 19 of 1993 (as amended) and the Food and Related Products (Registration) Act No. 20 of 1999: The National Agency for Food and Drug Administration and Control (NAFDAC) is the regulatory body that regulates and controls food production, importation, exportation and sales.

Regulation: Other regulatory bodies include the Standard Organization of Nigeria (SON), Quarantine service, the Federal Produce Inspection Service (FPIS), PIA, the Federal Ministry of Agriculture, and the Nigerian Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL).

Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Farm Crowdy, Sahel Capital, OLAM, Nigeria Farmers Group, Goatti, Group Farma, Farmkart, Pay Farmer

Government

SON (Standard Organization of Nigeria), Quarantine service, FPIS (Federal Product Inspection Service), PIA (Presidential Initiative on Agriculture), Federal Ministry of Agriculture, NIRSAL (Nigerian Incentive-Based Risk Sharing System for Agricultural Lending)

Multilaterals

USAID, Cultivating New Frontiers in Agriculture (CNFA)

Non-Profit

Bill and Melinda Gates Foundation, USAID, Local food banks, NGOs (non-government organizations), Acumen Fund

Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
rural

North West

Jigawa has a comparative advantage in agriculture (including livestock and fisheries) with one of the largest cattle markets in the country. The state has about 1.8 million cattle, 1.5 million sheep and 2 million goats. The estimated poultry population is 5 million.(14) Zamfara is also known for its livestock potential and has a large-scale indigenous marketing system operating across international boundaries.

References

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