Agric’s $30bn potential
Nigeria’s pursuit of a lucrative estimated export income of $30 billion from agriculture annually appears to still be running short as progress has really been slow, latest available data show ....
Nigeria’s pursuit of a lucrative estimated export income of $30 billion from agriculture annually appears to still be running short as progress has really been slow, latest available data show.
The central government of Nigeria has been trying hard to diversify its economy for years, pouring tonnes of money into agriculture through various support schemes including the Anchor Borrowers Programme, which has gulped well over N190 billion.
Analysts agree that agriculture provides an opportunity for the country to diversify its revenue base, especially with the Nigeria Export Promotion Council suggesting that agricultural exports can turn in $30 billion per year for the country.
But in spite of the tonnes of money that has gone into trying to push agriculture, GDP numbers released recently don’t tend to support that the diversification is going to happen anytime soon and the chase for that $30 billion export earnings from agriculture will take a long, long time, except something miraculous happens.
Well, Covid-19 has a role to play in slowing down a lot of things, but notwithstanding that, there is always something about how government pursues “happiness for all” in Nigeria. Once they are okay, the rest of us can go to hell.
Well, we are in that hell already!
So, what do the guys at FBN Quest think about this agriculture matter?
“The latest national accounts show that the agriculture sector grew by 2.2% y/y in Q1 2020, compared with 2.5% recorded in the previous quarter. Crop production accounted for 88% of agriculture GDP and grew by 2.4% y/y. We also note that the forestry and fisheries segments grew by 1.7% y/y and 1.5% y/y respectively, but each from a low base. Over the past eight quarters, agriculture has grown by an average of 2.1% y/y. The on-going pandemic (Covid-19) has resulted in supply chain disruptions, particularly across the food sector which has a direct link with agriculture.” Those are the stats, but they go on to provide perspective, as you can see below.
• The temporary lockdown in some states across Nigeria has harmed farming activities as well as the distribution of agricultural products. Transport restrictions have impeded farmers’ access to markets, resulting in upward price adjustments of farm produce such as rice.
• Over the past six months, there have been steady upticks in the rate of food inflation. The latest report from the NBS shows that in May food price inflation was 15.04% y/y. The highest increases were recorded in meat, oils and fats, tubers, bread, cereals, potatoes, fruits and vegetables.
• The CBN’s anchor borrowers’ programme (ABP), launched in 2015, has supported increased agricultural output. The CBN has disbursed about N190bn in loans under the ABP since its inception. Through the ABP total loans worth N432bn are expected to be disbursed to 1.1 million farmers across the country.
• To combat the current economic headwinds, the CBN has rolled out stimulus measures including a reduction in interest rates from 9% to 5% on its existing intervention programmes (ABP inclusive) over the next year.
• In June the CBN announced plans to fund 1.6 million farmers in the 2020 wet season across the country. This scheme falls within the ABP. The director in the CBN’s Development Finance Department disclosed that cotton farmers would also be included. As at last month, at least 250,000 such farmers had been identified for this initiative.
• The general assumption is that better access to credit would enhance the agricultural value chain. However, farmers are urged to take loan repayments seriously so as to give room for new debtors within this scheme in 2021.
• Agriculture has benefited from several FGN interventions. However, there seems to be a misalignment when we consider the investment injected into the sector and the sluggish pace of growth exhibited. Notwithstanding, steady investment will assist with repositioning agriculture as a backbone for the economy.
• The heavy reliance on one commodity for its export earnings has resulted in significant macroeconomic slippage for Nigeria. Now you know. As money is being thrown at this need to promote agriculture for diversification, it should produce result. Did you repeat the word misalignment?