The Director-General, Nigerian Stock Exchange (NSE) Oscar Onyema has lamented the failure of promoters of Nigerian agricultural ventures to avail themselves of the long term funding provided by the nation’s capital market.

He explained that the unimpressive performance of the agricultural sector despite its abundant potentials was largely caused by the lack of the capacity of the money market to support farming and other agricultural ventures, which require long term funding.

He said, “Despite the importance of capital market to the growth and development of the sector, promoters of Nigerian agricultural ventures are yet to take advantage of the opportunities the stock market provides.”

Speaking at the Facts Behind the Figures presentation of PrescoPlc at the exchange, he said: “there are five companies listed in the agriculture sector of this exchange and this sector accounts for N34.62 billion (0.4%) out of the total market capitalisation of N8.59 trillion as at October 29, 2012. We believe this situation can be better.”

According to him, “One of the reasons the sector has remained subsistent is because the financing needs for agriculture is quite substantial and it cannot be met through the money market. Taking into consideration the long-term nature of the sector as well as capital intensive disposition of the industry, the agriculture sector cannot rely predominantly on short-term borrowing.

“It is a known fact that the capital market has a comparative advantage over other sources of finance in the provision of long-term funds compared to the generally higher cost of bank financing for long-term capital infrastructural projects.”

Onyema said for the agric sector to take its prime place in the Nigerian economy, the capital market clearly holds the ace. “The Nigerian Stock Exchange is the right platform to raise capital towards the growth and expansion of this sector.
“We are capable, concerned and willing to work with the private sector in repositioning the Nigerian Agricultural industry. 

Notwithstanding the not too impressive performance of the agric sector in the nation’s economy, PrescoPlc has continued to thrive and has remained the toast of discerning investors in our market since it was listed on the Nigerian Stock Exchange ten years ago.
In what is considered as a vote of confidence on PrescoPlc, Onyema said the company has consistently rewarded investors’ loyalty, adding that its dividend payout of 100 kobo in 2011 represented an increase of 100% compared with the 50 kobo it paid in 2010.

Source: Thisday