In this piece, James Emejo assesses the performance of the agricultural sector in the previous year, stating that although significant progress had been achieved, more interventions are required to increase productivity in the sector
No doubt agriculture remains key to the country’s economic diversification agenda and has received a lot of attention by the government in recent times.
Amidst growing uncertainties and vulnerabilities in the oil sector, especially as the debate on renewable or alternative energy sources intensifies globally, agriculture, with its vast potential has become the new gold mine for the Nigerian economy as it tries to boost non-oil ventures.
The sector remains the largest sector contributing an average of 24 per cent to the country’s GDP between 2013 – 2019, and employs over 36 per cent of the labour force. In addition, the sector holds the key to solving the country’s unemployment crisis. The National Bureau of Statistics (NBS) estimates that about 23.18 million Nigerians unemployment with the unemployment rate put at 33.3 per cent in the fourth quarter of 2020 (Q4 2020) compared to 27.1 per cent in Q2.
However, until recently, agriculture had been abandoned by past administrations following the discovery of oil, which had now become unsustainable as alternative energy sources emerge.
With the challenges posed by the COVID-19 pandemic which almost crippled world economies and subjected developing economies like Nigeria to serious fiscal constraints, the government has realized the urgent need to further diversify its revenue base into non-oil sectors by boosting support to priority sectors of the economy with high potentials to create jobs.
There has been unprecedented financial support to agriculture in a manner not witnessed since the advent of the oil economy while hitherto moribund agencies had been revived and funded to boost agriculture.
It is on record that agricultural projects and ventures have enjoyed improved financial interventions from government, private and financial sectors in recent times while farmers have had easier access to credit at single digit or affordable rates through government’s interventions.
The intervention of the Central Bank of Nigeria (CBN) in agriculture through the Anchor Borrowers Programme (ABP) had been a game-changer that has ushered a revolution in local rice production, maize, wheat and other products in the value chain.
Funding interventions
According to the CBN governor, Mr, Godwin Emefiele, the apex bank has cumulatively disbursed the total sum of N864 billion to 4.1 million
farmers, cultivating 5.02 million hectares across the country.
Under the bank’s Agribusiness Small and Medium Enterprise Investment Scheme (AgSMEIS), a total of the Bank has released N134.63 billion to 37,571 Entrepreneurs while N43.19 billion had been disbursed to support the cultivation of over 250,000 hectares of maize, sorghum, soya beans and rice during the 2021 dry season between September and October 2021, under the ABP.
This is in addition to N5.88 billion to finance six large-scale agricultural
projects under the Commercial Agriculture Credit Scheme (CACS).
The CBN also disbursed the sum of N41.2 billion for the commencement of the brown revolution, a large-scale wheat programme to wean us off imports by 35 per cent in the first year.
Also, among several other initiatives by the federal government, the hitherto moribund National Agricultural Land Development Authority (NALDA), which is now directly under the supervision of President Muhammadu Buhari had recently been revived and funded to reclaim all the federal government’s abandoned lands across the country and commit same to boosting modern agriculture in rural areas and with a mandate to boost job creation. Through the intervention, led by NALDA Executive Secretary, Prince Paul Ikonne, farm estates are being built across the country, creating jobs and livelihoods.
Poor contribution to GDP
However, in spite of the notable boost in agriculture funding as well as achievements so far recorded, the potentials of the sector remained largely underutilised. As a consequence, the growth and contribution of the sector to economic growth in recent times had been called to question.
The sector grew by 1.22 per cent (year on year) during the third quarter of 2021 in real terms lower than third quarter 2020 which recorded 1.39 per cent and a decrease of 0.08 per cent compared to 1.30 per cent in the preceding quarter.
Even though agriculture is broadly divided into four sectors namely crop production, fishing, livestock and forestry, only crop production remains the major driver of the sector and accounted for 87.32 per cent of overall nominal growth of the sector in third quarter 2021.
Agriculture contributed 29.94 per cent to overall GDP in real terms in Q3, lower than the 30.77 per cent contribution in the third quarter of 2020.
Inherent challenges
However, given that the present administration had been celebrated for improving funding to agriculture; analysts believed the performance of the sector was dismal adding that its growth and performance is still constrained by several factors, which needed to be addressed.
In a report on the, “Current State of Nigeria Agriculture and Agribusiness Sector,” Associate Director, PwC Nigeria, Mr. Taiwo Oyaniran, stated that Nigeria’s agricultural trade deficit had continued to widen amid government’s push for self-sufficiency in the sector.
He said despite interventions from the government agricultural trade remained constrained by poor infrastructure, pointing out that the sector was still constrained by lack of access to finance
Although the federal government had provided several facilities through the CBN.
He said the farming industry still lacked adequate access to finance, insufficient supply to meet population growth and food demand adding that with a population of about 200 million , Nigeria s agricultural productivity remained insufficient to meet the food demanded of its growing population thus increasing the demand and supply gap in the country.
Absence of value addition and supply Nigeria focuses mostly on food production, thus neglecting the processing and manufacturing segment of the value chain. The chain reaction that arises from shortages of resources, lack of financing for small scale farmers and inefficient transport systems, exacerbates the development of food production along the value and supply chain.
Analysts’ perspectives
Meanwhile, analysts while acknowledging the improved funding mechanism to the sector blamed the poor performance of agriculture to the country’s GDP on several factors particularly the worsening insecurity in the country.
They believed that no matter the amount of money pumped into the sector, there would not be a commensurate outcome except the present security condition was improved.
The analysts in separate interview with THISDAY also identified lapses in the coordination of agricultural intervention programmes among the agencies of government as a limitation to the development of the sector as well as some administrative gaps in export activities among others.
The Managing Director/Chief Executive, SD&D Capital Management Limited, Mr. Idakolo Gbolade, said the federal government through its agencies had spent a lot on agriculture in recent times in realization of its ability to create jobs, increase foreign direct investments and contribute significantly to the GDP.
But he argued that most of the investments in the sector had been plagued with insecurity in agrarian areas, communal clashes and insincerity on the part of beneficiaries of various grants.
He said, “For example the beneficiaries of the Anchor Borrowers Programme were serious affected by the farmers/herders crisis which limited growth and prevented them from achieving repayment of the loans due to little or nothing to harvest. Logistically, the insecurity in most part of the country also affected agricultural inputs from reaching the desired areas for profitable business.”
Gbolade said the government has also not fully perfected the exportation of agricultural produce from Nigeria to other countries, which made some exported produce to be rejected with the exporters incurring significant losses.
Also, he said the federal government needed an action plan to adequately settle the farmer/herders crisis, improve security across the country and also improve the diplomacy attached to export to especially EU countries, Britain and USA.
He added that the respective MDAs that are responsible for supporting the agricultural value chain in the country needed to be up to their responsibilities in 2022 and “not only tackle inherent problems but also ensure that there is level playing ground for intending investors.”
Also speaking to THISDAY, Managing Director/Chief Executive, Credent Investment Managers Limited, Mr. Ibrahim Shelleng, said the agricultural sector has remained subdued largely due to insecurity issues in the country.
He said the majority of farmers are subsistence farmers who rely on manual labour to produce, pointing out that due to incessant attacks on farmlands, a large number have had to abandon their farms.
He said maintained that despite the government’s credit schemes to farmers, it still remained largely inaccessible to many farmers either due to lack of awareness or the inadequate literacy that limits rural farmers from applying.
Shelleng said while majority of funding had focused on inputs, the entire value chain needed to be looked at from input, storage and processing, transportation and access to local and international markets.
He added that the high inflationary conditions also made cost of inputs and equipment increase beyond the reach of local farmers.
He said, “For the sector to thrive, the government needs to focus on providing agricultural hubs that are focused on mechanised farming and processing. Provide incentives for the value chain to thrive such as tax incentives for potential private sector investors and incentivise states to harness their potential by producing export ready produce that could bring in much needed foreign exchange. The backward integration would also encourage more players to enter the agric space.”
On his part, Managing Director/Chief Executive, Dignity Finance and Investment Limited, Dr. Chijioke Ekechukwu, also blamed insecurity, funding gaps and other challenges for the low performance of the agricultural sector.
He said, “Although we agree that agriculture has received more in the current dispensation than any other government and other sectors, the reality is that the amount of funding in this sector is grossly inadequate.
“Many factors however are responsible for the abysmal output despite the increased funding. Lack of coordination between CBN and the Ministry of Agriculture and Bank of Agriculture in respect of funding, is a major factor.
“The insecurity in the country remains a problem. Lack of transparency and accountability of the funds disbursed also accounts for the low output. We need to take research very seriously and utilize their results to increase our agricultural yield.”
