Livestock production
Livestock production
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
- Nigeria: North West
Sector Classification
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)
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)
Meat, Poultry and Dairy
Pipeline Opportunity
Livestock production
Raise livestock and produce livestock products, such as poultry, eggs, cattle, dairy, pigs
Business Case
Market Size and Environment
> 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
> 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
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
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Capital - Limited Investor Interest
Business - Supply Chain Constraints
Impact Case
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
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
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)
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)
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)
25.5% in 2015.(17)
Moderate: 26.4%. Severe 19.6%.(17)
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
Corporates
Indirectly impacted stakeholders
Corporates
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
What
Outcome is likely to be positive as investments in livestock production could potentially increase productivity, increase employment opportunities and income of farmers.
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
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
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
Nigeria: North West
References
- (1) Federal Republic of Nigeria (2017). Implementation of the SDGs: a national voluntary review. https://sustainabledevelopment.un.org/content/documents/16029Nigeria.pdf
- (2) Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G. (2019): Sustainable Development Report 2019. New York: Bertelsmann Stiftung and Sustainable Development Solutions Network (SDSN)
- (3) Federal Republic of Nigeria (2017). Economic Recovery and Growth Plan 2017 - 2020. Abuja: Ministry of Budget and National Planning.
- (4) Dalberg (2020). Charting the future for Africa's largest economy: Economic impact of COVID-19 in Nigeria. https://dalberg.com/wp-content/uploads/2020/04/FINAL_Dalberg-Report-Charting-the-Future-of-Africa%E2%80%99s-Largest-Economy.pdf
- (5) Federal Republic of Nigeria (2011). Agricultural Transformation Agenda 2011.
- (6) Food and Agriculture Organization of the United Nations (2020). The future of livestock in Nigeria: Opportunities and challenges in the face of adversity. http://www.fao.org/3/ca5464en/ca5464en.pdf
- (7) Delta State. Central policy 'SMART' Agenda Plan: 2015 - 2023 and beyond.
- (8) Group Farma (2020). Farms. https://www.groupfarma.com.ng/farms
- (9) Farmcenta (2020). Farm store. https://farmcenta.com/shop/prod/38
- (10) Pay Farmer (2020). Pay Farmer. https://payfarmer.com/page/
- (11) Food and Agriculture Organization of the United Nations (2020). FAO in Nigeria. http://www.fao.org/nigeria/fao-in-nigeria/nigeria-at-a-glance/en/
- (12) Agricultural Policy for Nigeria.
- (13) Nigerian Investment Promotion Commission (2020). 3: Sector Specific Incentives. https://nipc.gov.ng/compendium/3-sector-specific-incentives/
- (14) Invest Jigawa (2020). Agri-business. http://www.investjigawa.gov.ng/sectors/agribusiness/#:~:text=Jigawa%20is%20a%20major%20livestock,potentials%20are%20currently%20under%2Dutilized.
- (15) Goatti (2021). Goatti. https://goatti.ng/#
- (16) Federal Republic of Nigeria (2020). Integration of the SDGs into National Development Planning: A Second Voluntary National Review (2020). https://sustainabledevelopment.un.org/content/documents/26309VNR_2020_Nigeria_Report.pdf
- (17) Federal Republic of Nigeria (2017). Implementation of the SDGs: a national voluntary review. https://sustainabledevelopment.un.org/content/documents/16029Nigeria.pdf
- (18) UNDP (2020). Human Development Report (2020). https://www.ng.undp.org/content/nigeria/en/home/library/human_development/the-2020-human-development-report.html