AGRICULTURE – The Panacea To Oil Dependency In Nigeria


1.    Nigeria, a country blessed with abundant natural resources, i.e. fertile lands, clement weather and climate etc. has been heavily dependent on oil and gas production and export for its economic growth. This was not so, almost 6 decades ago. In the 1960s, Nigeria was one of the most promising crop-producing nations in the world. Between 1962 and 1968, agriculture was the country’s main foreign exchange earner. The country was number one globally in palm oil exports, well ahead of Malaysia and Indonesia, and exported 47 percent of all groundnuts, putting it ahead of the US and Argentina.

 2.    The discovery of oil has come at the detriment of the agricultural sector. Although Nigeria became majorly an oil-exporting country, it nevertheless, still exports a number agricultural produce. The aforementioned accounts for the increase in the poverty level in the country. Nigeria is recording high economic growth, but without robust growth able to impact millions of people because it is not connecting to agriculture. It is staggering to note that 2 out of every 3 Nigerians live below the poverty line of $1 per day in income.  The woes the oil industry has caused are far more than its benefits and merits.

3.    The neglect to develop and improve the agricultural sector has resulted in the impoverished state of rural areas (home to more than 70 percent of the nation’s poor). Development indicators in rural areas lag behind those for the urban: incomes are lower, illiteracy is more widespread, malnutrition is more prevalent, and greater proportion of people lack access to clean water and improved sanitation practices. Summarily, the standard of living in the rural areas is very low, as a result of decline in the agricultural sector.

4.    For the foreseeable future, the welfare of the rural populations is tied to agriculture. It is the backbone of the rural economy, generating about 35 percent of the gross domestic product (GDP) and providing the largest source of rural employment. Recognizing the sector’s high growth, export potential, development and investment opportunities, the Federal Government of Nigeria has increasingly focused on agricultural development as a support mechanism for macroeconomic stability and non-oil growth. Recent mid-term national development strategies have sought to significantly augment production and exports, in close collaboration with investors from the private sector. The following are the key milestone achievements in Nigeria’s agricultural sector, as a panacea to oil dependency:

a. Economic Impact: Agriculture is the largest single economic sector in Nigeria by contribution to real GDP growth, and a major source of employment for the country. The World Bank reports that agriculture’s contribution to real GDP has risen steadily in recent years, from 24.4% in 2016 to an estimated 25.1% in 2017 and a forecast 25.4% in 2018. It is also a major source of employment. The agricultural workforce has fallen from a 25-year high of 60.7% of total employment in 2002 to an all-time low of 30.6% in 2010, before rebounding to 36.3% in 2016 and 36.6% in 2017, according to World Bank data.

b. Promising Growth: The production of food, beverages and tobacco has recorded strong growth recently, with the National Bureau of Statistics (NBS) reporting that the segment recovered from an 11.1% contraction in the first quarter of 2016 and expanded by 4.1% in the first quarter of 2017. Growth hit 5.5% in the first quarter of 2018, its highest level in nine quarters. The sector holds high potential for future growth. Out of 82m ha of arable land in the country, only 34m ha have been cultivated, according to a 2017 report titled “Transforming Nigeria’s Agriculture Value Chain”. There remains work to be done, however, particularly in terms of planning and infrastructure. “Food security is the fundamentals of any society, food reduces the rate of crime than bullets and guns” Azeez Oluwole, CEO, Farmkonnect Agribusiness Nigeria.

c. Production: Crop production improved steadily in 2017, and in February 2018 the National Agricultural Extension and Research Liaison Services (NAERLS) reported that maize output rose by 12% in 2017 to hit 12.1m tonnes, while rice production expanded by 14.7% to 8m tonnes. Sorghum production, meanwhile, rose by 4.4%, while soybean, cassava and cowpea production increased by, 11.4%, 7.7% and 6.1%, respectively.

d. Macro Targets:  The Federal Ministry of Agriculture and Rural Development (FMARD) is responsible for agricultural policymaking and implementation. A key piece of agricultural policy is FMARD’s Agriculture Promotion Policy (APP), also called the Green Alternative, which runs from 2016 to 2020. Recognising agriculture as “key to long-term economic growth and security”, APP aims to develop Nigerian agri-business so that it is capable of meeting domestic food needs, boosting exports and supporting income and job creation. Its approach encourages development that is led by the private sector and facilitated by the government. Nigeria’s national economic development agenda also emphasises private sector participation in agricultural development, as well as the importance of attaining food self-sufficiency.

e. Spending Support: As well as imposing import restrictions, the federal government has channeled spending into a host of financing and insurance initiatives to improve farmers’ access to financial services.  With a view to expanding access to financial services, the federal government has also undertaken a host of spending interventions aimed at supporting agriculture in recent years, including establishing the Nigerian Agricultural Insurance Corporation (NAIC) to provide insurance coverage for farmers; the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL); the Growth and Employment in States project, which seeks to create 100,000 direct jobs and boost non-oil growth; and the Commercial Agriculture Credit Scheme (CACS) and Anchor Borrowers’ Programme (ABP), which are intended to expedite agricultural development through the provision of low-cost credit.

f. Infrastructural Improvements: In the November 2017 budget speech, President Buhari reported that FMARD had completed over 33,000 ha of irrigation projects in key food-producing states, with the ABP and the Presidential Fertiliser Initiative, launched at the start of 2017, set to remain important support mechanisms for future work. The 2018 budget includes funding for irrigation projects at Ada in Enugu State, Lower Anambra in Anambra State, and Gari in Jigawa State. The Budget Office reports that N6.4bn ($20.6m) was allocated to FMARD for the construction and provision of roads in the 2018 budget, including N4.6bn ($14.8m) for rehabilitation and repairs. This will help farmers reach the market. Infrastructure challenges are also being addressed through the development of 14 planned staple crop processing zones (SCPZs), with the 2018 budget prioritizing development of six SCPZs. In addition, private investments in SCPZ-linked rice processing and biofuel production are expected to significantly augment the country’s agricultural export receipts.

 5.    Although agriculture stakeholders in Nigeria continue to face serious challenges in terms of expanding production, reducing cheap imports and growing exports, the agriculture sector continues to show high potential for future expansion. A large and growing domestic population, an ample supply of arable but unfarmed land and a diverse food production base should see the country make strong progress towards its mid-term growth targets. In addition, it needs to clamp down on chronic smuggling and reduce food imports, factors which together have dampened the near-term outlook.

 

References:

i. Ehui, S. and M. Tsigas, 2006, “Identifying agricultural investment opportunities in sub-Saharan Africa: A global, economy-wide analysis,” African Journal of Agricultural and Resource Economics, 1(1):1-19, December.

ii. Hertel, T., editor, 1997: Global Trade Analysis: Modeling and Applications, Cambridge Univ. Press, January.

iii. Ehui, S. and M. Tsigas, 2009, The Role of Agriculture in Nigeria’s Economic Growth: A General Equilibrium Analysis.

iv. The Report: Nigeria 2019, https://oxfordbusinessgroup.com/overview/promising-yields-agriculture-propitious-option-administration-looking-decrease-dependence-oil

September 10, 2020