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The agricultural industry has been highlighted as one of the sectors that can assist propel the Nigerian economy at a critical juncture in which crude oil, the country’s main source of revenue, is dropping on the international market.

The current administration has stated repeatedly that the country must return to agriculture because it is clear that oil and gas will no longer be sufficient as a major revenue generator for the economy (The Analyst, November, 2015).

It is worth repeating that Nigeria’s golden years in agriculture were prior to the commercial discovery of oil and the subsequent relegation of agriculture to the backyard. The golden years of agriculture were also the years when the regions were fully engaged in agriculture,

with each region specialising in items where it had a natural competitive advantage. The export earnings from these products enabled the regions to become financially and fiscally independent of the central government. All of this changed with the discovery of oil and the distribution of oil money to different levels of government (El-Rufai, 2011).

There is no denying that agriculture has been the basis of the Nigerian economy despite its decline, particularly since the 1970s oil boom that heralded the petro-dollar era.

A large amount of the population–roughly two-thirds of the total labour force of the country–depends on the sector for a living, and agriculture, in particular, drives the rural economy. It is the primary source of food for the majority of the people, as well as the leading economic activity in terms of employment and links to other sectors of the economy,

as well as a large source of raw materials for Agro-Allied industries and a significant source of foreign exchange. Over the years, the industry has been the largest contributor to the nation’s GDP,

accounting for 42.07 percent in 2008, 35.8 percent in 2009, and 2.2 percentage points to real GDP growth in the first quarter of 2010 (Uzor, 2011).

Agriculture’s relative contribution to real GDP fell from 0.92 percent in the first quarter of 2015 to 0.73 percent in the second quarter, according to sectoral data.

The drop was attributable to a decrease in the proportional contribution of crop production, livestock, and fishing from 0.76, 0.11, and 0.04 percent in the previous quarter to 0.59, 0.10, and 0.03 percent in the second quarter of 2015. However, forestry’s percentage contribution remained unchanged in the second quarter of 2015 (CBN Statistical Bulletin, June 2015).

The agricultural sector rose by 9.33 percent, with crop production accounting for 83.35 percent of the sector’s entire growth. In Q3 2015, agriculture contributed 24.5 percent of Nominal GDP (National Bureau of Statistics Q3 GDP report).

It is believed that the sector would fare far better than this with increased investment and access to capital. The capital market can be used to raise funds for sector investments.

The capital market provides a platform for the agriculture sector to take the lead in the Nigerian economy. The agriculture industry has stayed stable since its financial requirements are significant and cannot be satisfied by the money market (Onyeama, 2015). Taking into account the sector’s long-term character as well as the industry’s capital-intensive disposition.

The farm sector cannot rely solely on short-term financing. It is well understood that the capital market has a comparative advantage over other forms of funding in terms of providing long-term money, as opposed to the generally higher cost of bank financing for long-term infrastructure projects.

There are just five businesses listed on this exchange’s agriculture sector, which accounts for $34.62 billion (0.4 percent) of the total market capitalisation of $8.59 trillion as of October 2012.

Onyeama (2012). As of April 11, 2016, there are five businesses listed on the NSE in the agriculture sector, accounting for N69.9 billion out of the overall market value of N8.475 trillion, representing 0.43 percent of the entire market capitalization.

FTN Cocoa, Okomu Oil, Presco, Ellah Lake, and Livestock Feed are the companies. Okomu Oil and Presco are the best-performing stocks, trading at N31.25 and N34.60, respectively, with year-to-date gains of 3.14 percent and 3.85 percent. As of April 11, 2016, FTN Cocoa is trading at its normal price of 50kobo per share, Ellah Lake is selling at N4.26 per share, and Livestock is selling at 94kobo per share.

Nigeria is well positioned to give the resources needed to address these issues. There are far too few agriculture enterprises registered on the Nigerian stock exchange. There are over 200 Agro-Allied companies in Nigeria,

but only five (5) of them are listed, accounting for only 0.33 percent of the Nigeria Stock Exchange’s total market capitalization, making it one of the sectors with the lowest representation on the bourse (National Bureau of Statistics, 2015).


Agricultural venture promoters have been unable to access long-term investment from the nation’s financial market. The agricultural sector’s poor performance, despite its vast potential, was mostly due to a shortage of money in the market to support farming and agricultural initiatives that required long-term finance (NSE, 2015).

Despite the importance of the capital market to the sector’s growth and development, promoters of Nigerian agricultural projects have yet to capitalise on the prospects provided by the stock market.

One of the reasons why the capital market has stayed stable is because agriculture has significant financing needs that cannot be satisfied through the money market. Given the long-term nature of the business as well as the capital-intensive nature of the industry, the agriculture sector cannot rely solely on short-term financing. Onyeama (2012).

The sector’s difficulties are not insurmountable because Nigeria is ideally placed to supply the resources needed to overcome them. There are far too few agriculture enterprises registered on the Nigerian stock exchange.

There are around 200 Agro-Allied enterprises in Nigeria, however only five (5) are publicly traded (National Bureau of Statistics, 2015).

If only roughly 2% of agricultural enterprises in Nigeria now use the Nigeria capital market platform, it is clear that the medium has not been fully utilised by the agricultural sector.

The lack of agricultural enterprises on the Nigerian stock exchange may be ascribed to the high listing requirements that must be met before companies may be listed and reap the benefits of the Nigerian capital market.

These listing criteria are viewed as burdensome by enterprises, hence the majority of them choose not to be listed and remain private. As a result, the benefit that the capital market gives in terms of fund raising and capital formation has not been passed on to these enterprises, limiting their expansion.

During the height of the oil boom in the 1970s, the agricultural sector was neglected. Since then, Nigeria has been plagued by acute poverty and a scarcity of basic food staples.

Historically, the neglect of agriculture and greater reliance on a mono-cultural economy dependent on oil are at the basis of the Nigerian economy’s crisis.

For several years, the agriculture sector’s contribution to the nation’s GDP has been declining. Looking back to 2008, the agriculture sector contributed 6.30 percent to GDP, 5.90 percent in 2009, 4.00 percent in 2012, and 2.61 percent in 2013.

Real agricultural GDP growth in the fourth quarter of 2014 was 3.64 percent (year on year), a rise of 0.62 percentage points from the same period in 2013, but a decrease of 0.83 percentage point from the third quarter of 2014. Growth was somewhat lower in the third quarter of 2015 compared to the previous quarter.

As a result, the study intends to examine the capital market’s long-term fund raising capacities in order to promote agricultural financing and growth. The agriculture sector’s growth and performance are frequently judged in terms of its influence and contribution to GDP.


The overall goal of this research is to assess the impact of the capital market on agriculture sector performance.

Among these, the study’s precise aims are as follows:

1. To assess the agricultural sector’s contribution to market capitalisation.

2. To assess the agricultural sector’s performance over time.

3. Determine whether there is a link between sectoral market capitalisation and agriculture sector performance.


This study provides answers to the following questions:

1. How has the agricultural industry contributed to market capitalization?

2. What has been the performance of the agriculture industry over time?

3. Is there a link between agriculture sector market capitalization and agricultural sector performance?


H01: The agricultural sector contributes nothing to market capitalisation.

H02: The agricultural sector has consistently underperformed.

H03: There is no association between agriculture sector market capitalization and agricultural sector performance.


The study is concerned with the capital market’s funding and expansion of the agriculture industry. The Nigerian agricultural sector stands to gain a lot if initiatives are done to source funds through the capital market that will be used in the long run.

This study is expected to benefit agricultural stakeholders, agricultural companies, agricultural investors, industries (that use agricultural products as raw materials), the government, and individuals and other researchers interested in the agricultural sector.

It will enable agricultural companies to explore the capital market and capitalise on chances to raise finances and finance for the growth of their businesses and the agricultural sector as a whole.

Investors in the capital market now have more options for diversifying their investment portfolios and lowering their overall risk. Agricultural investors are enticed to maximise their potential profit even beyond national borders.

This research will also be useful to other academics interested in the agriculture sector because it will serve as a foundation for future research. The expansion of the agricultural sector benefits the country’s overall economy, the government, and the entire population.


This study seeks to address the capital market funding of listed agricultural enterprises in the agricultural industry. However, the study did not investigate how the monies raised by the corporations are used or how the companies are run.

The research will focus on Nigerian agricultural enterprises that are publicly traded. The time span under consideration is ten years, from 2005 to 2015. This time period was chosen to investigate the performance of the agriculture industry in the capital market during the last decade.

The year 2016 will not be included because obtaining a complete record of Agriculture sector performance at the time of this study work is unattainable.


This study’s core terms are agricultural, sector, capital market, finance, growth, GDP, and market capitalization.

AGRICULTURAL: This refers to everything related to agriculture. Agriculture is the cultivation of crops and the raising of animals for human use and as a source of income.

SECTOR: This is the zone, section, or sub-division in which a unit operates and is accountable.

CAPITAL MARKET: A financial market for the purchase and sale of long-term debt and equity-backed assets.

FINANCE: The monetary resources available for the operation of a business or enterprise.

GROWTH: Increase in business, trade, or activity.

GROSS DOMESTIC PRODUCT (GDP): This is the entire amount of money spent on final goods and services produced inside a country’s geographical boundaries over a given time period, usually a year, minus investment in other nations.

MARKET CAPITALIZATION: The market value of a publicly traded company’s shares outstanding at a certain point in time. This value is calculated by multiplying the stock price by the total number of shares outstanding.

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