Provide an Assessment of the Macroeconomic Environment over the Last 5 Years; and Assess and Evaluate How the Macroeconomic Environment Has Affected a Particular Business.

Topics: Macroeconomics, Policy, Economics Pages: 2 (431 words) Published: December 30, 2011
Agriculture used to be the mainstay of the Nigerian economy before the discovery of oil. Food was produced in large quantity for both the country’s consumption and export. The sector accounted for 70% of the population while significantly contributing about 60% of the GDP. In present day, the discovery of and reliance on oil has seemingly desecrated agriculture into the back-bench of the Nigerian economy. This has seen the sector accounting for only about 40% of the GDP and providing only about 6o% of the country’s employment (CBN Various macroeconomic factors affect agribusiness in Nigeria, major among these are stable and predictable policy environment, interest rates, employment, unstable foreign exchange rates, current account and government spending.

Stable and predictable policy environment: Prior to 1999, Nigeria has had unstable governance characterised by various military coups and unstable democratic government. This impacted on the implementation of policies and continuity in governance which impacts negatively on the macroeconimic environment. Since 1999 however, democracy has been sustained successfully and this has had a positive impact on the implementation of policies in the agricultural sector and the stability of the economy as a whole.

Inadequate access to Finance: the sector is faced with the challenge of low financing. Presently, only 1% of loans from the banking sector is geared towards the agricultural sector. This has made the agribusiness very discouraging for farmers and also for new entrants.

Interest rate: Lending rates in the country are quite high. At the moment, banks loan money to customers at 22%.

Employment: it has been estimated that the agricultural sector is responsible for 60% of the country’s employment.

Foreign Exchange Rates: fluctuation forex values affects the agribusiness in terms of cost of purchasing imported inputs or the cost of goods meant for exports Dependence on animal feed importation: most...
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