Felix Odemero Achoja, Christopher Okereke Chukwuji
Abstract
Financial Fragility and Macroeconomic shocks make poultry agribusiness vulnerable to risk (unsteady profit). This tends to
dampen investment drive and inhabits aggregate growth in the poultry sub-sector in Nigeria. To address this problem, time
series data of 6 years (2004-2009) were collected from 200 randomly selected poultry farms. Multiple regression and t-test
were used to analyse the collected data. T-test of return on investment shows that poultry agribusiness has low financial
fragility and could be resilient enough to withstand macro-economic shocks. Co-integration results indicate that poultry
agribusiness risks moves together with inflation rate, interest rates and real exchange rate. According to the results of vector
autoregressive (VAR) test, it is shown that poultry agri-business risk is sensitive to macroeconomic shocks. But with sound
financial structure, poultry agribusiness will be able to withstand financial fragility. The impacts–response analysis shows
that increase in macroeconomic distortions leads to increase in poultry agribusiness risk in Nigeria. The results of study
provided information on how macro economic shocks and fragile financial structure can trigger risk in poultry agribusiness
sector. This information is very crucial to effective policy making and economic planning that will bring development to the
poultry sector and the Nigerian economy. Factor analysis confirmed that inflation rate (0.0039) and interest rates (0.1218)
are the significant distortion factors (P < 0.01) that exert more impact on poultry agribusiness risk. Regulated interest and
inflation rates would stabilize earnings and lead to growth in poultry agribusiness in Nigeria.
Key words:
Investment; regulation; macroeconomic variables.