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Nigeria farming. Photo by Michael Stulman/CRS
THE local agricultural industry continues to underperform in spite of the significant level of credit interventions in the sector by the Central Bank of Nigeria (CBN) and state-owned development programmes.
Insecurity plaguing the continent’s biggest economy is largely blamed for the recession.
Despite the sector’s importance to the government’s diversification drive and its significant role in job creation, the sector’s outcomes continue to fall short of expectations.
Further illustrating agriculture’s importance to the economy is the fact that it contributed 22 percent to Nigeria’s gross domestic product (GDP) in the first quarter of 2023.
It is also estimated to employ about two-thirds of the country’s labour force.
Yet, the latest national accounts show that the agriculture sector contracted by 0,9 percent year-on-year in the first quarter, much weaker than the 1,88 percent y/y in the previous quarter.
FBN Quest, the investment banking & asset management businesses, believes the negative impact on economic activity resulting from the cash crunch caused by the CBN’s naira redesign policy may also have contributed to the dull performance of the sector in the first quarter of 2023.
“However, given the injection of investments into several agricultural interventions, especially those by the CBN, the sector’s performance has been disappointing,” FBN stated.
As a result of the CBN’s intervention and push for banks to boost credit availability to the sector, deposit money bank’s disbursements to the sector increased to ₦1,9 billion (US$2,45 million) as at February 2023 from ₦1,6 billion in February 2022.
Structural factors that disrupt supply chains hamper agriculture productivity.
Some of the notable challenges include insecurity in food-growing regions, poor infrastructure, and post-harvest losses due to inadequate storage facilities, among others, according to FBN.
“Despite the various agricultural policies implemented by the government in increasing domestic food production and boosting export volume, the country remains a net importer of food items.”
According to the National Bureau of Statistics report on foreign trade in the first quarter of 2023, Nigeria recorded a trade deficit of about 192 billion on agricultural commodities.
“If insecurity, which remains the biggest limitation of the government’s investment in the sector, can be addressed, it would significantly improve agricultural productivity and reduce Nigeria’s dependence on food imports,” FBN concluded.
Nigeria’s economy is overly reliant on oil.