The Performance of Agriculture Sector in Nigeria from 1986 to 2024: A Case Study from Capital Market Fundamentals

Abstract

This study examined the impact of capital market fundamentals on the performance of the agricultural sector in Nigeria from 1986 to 2024. The study employed an ex-post facto research design using annual time series data sourced from the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC). After conducting unit root and cointegration tests to confirm the long-run relationship among variables, the Fully Modified Ordinary Least Squares (FMOLS) technique was used for estimation. The results revealed that All Share Index had a positive and statistically significant impact on agricultural sector growth, indicating that overall stock market performance contributed to creating an investment-friendly environment that supported agricultural activities. Conversely, equities showed a negative but significant impact, showing that equity financing has not been effectively channelled toward agriculture. In contrast, corporate bonds had a positive and significant impact, highlighting the importance of long-term financing mechanisms for capital-intensive agricultural investments. Based on these findings, the study recommended that the Securities and Exchange Commission (SEC) and the Nigerian Exchange Group (NGX) strengthen efforts to promote agricultural firm listings and improve market access. The Federal Ministry of Agriculture and Food Security was encouraged to work with regulatory agencies to design tailored equity incentives for agribusinesses. Furthermore, the Debt Management Office (DMO) and the Central Bank of Nigeria (CBN) were urged to facilitate the issuance of agriculture-focused bonds and provide credit enhancements to attract institutional investors such as pension funds and insurance companies.