Concerned stakeholders and citizens in Nigeria have always clamoured for a diversification of Nigeria’s Economy away from the sale of crude oil. In its stead, they argue that Agriculture is the next viable and potentially economically beneficial sector that could replace that. But agriculture in Nigeria has faced numerous challenges that have affected its development and productivity. One of the key issues include inadequate infrastructure. Poor rural infrastructure, including roads, storage facilities, and Irrigation systems, reduces the efficient production, transportation, and storage of agricultural products. Farmers often try to resolve this issue by borrowing from banks to buy machinery, build storage facilities and transport equipment. However, they struggle to obtain loans or credit due to stringent banking requirements and high-interest rates, limiting their ability to invest in better farming techniques and equipment.
Land tenure systems are also Inconsistent and unclear in Nigeria. They create Insecurity for farmers and make long-term investments in land improvement risky. Nigeria operates under a dual land tenure system comprising statutory and customary laws. The statutory system is governed by the Land Use Act of 1978, which vests all land in the state governors, while the customary system is based on traditional practices that vary widely across different regions and ethnic groups. This duality often leads to conflicts and confusion over land ownership and usage rights. The Land Use Act was intended to simplify land administration and make land more accessible for development. However, its implementation has been problematic, leading to bureaucratic delays and corruption. The process for obtaining a Certificate of Occupancy (C of O) is also cumbersome and expensive, and many farmers just give up.
Contribution of the sector to the country’s GDP.
These and other issues, including climate change, pests and diseases, low Technology adoption, inadequate government support, insecurity, challenges in accessing markets and limited access to agricultural education, often plague the sector. Despite these problems, the sector is a major one in the country. It employs about 70% of the workforce. It provides livelihoods for millions, especially in rural areas and helps to reduce Poverty and unemployment. It contributes a lot to Nigeria’s Gross Domestic Product (GDP). It is one of the largest sectors of the economy, providing substantial income and driving economic growth.
According to the National Bureau of Statistics (NBS), in the first quarter of 2023, the sector contributed approximately ₦4,917.63 billion to the GDP, which showed a year-on-year growth of 2.31%. It also represents approximately 23.78% of the total GDP for that quarter. By the second quarter, this contribution was around ₦5,005.84 billion, indicating a continued positive growth but at a slightly lower rate of 2.51%. This makes up about 24.17% of the total GDP for the second quarter. For the fourth quarter of 2023, the agricultural sector contributed about ₦4,986.94 billion, reflecting a growth rate of 2.10%. It also accounts for around 23.98% of the total GDP for that quarter.
Food import severely affects the economic standing of the country.
Further, the prosperity of this sector ensures Food Security for the nation by producing a variety of crops and livestock. It reduces dependence on food imports, stabilizes food prices, and helps mitigate hunger and malnutrition. The NBS reported that Nigeria spent about $10 billion on food imports in 2022, which was an increase from the previous years. This includes staple foods like rice, wheat, sugar, and fish. Again, Nigeria is one of the largest importers of rice globally, for instance. Despite efforts to boost local production, imported rice accounts for a large portion of domestic consumption. The country has imported about two million metric tons of rice annually in recent years, costing around $1.2 billion.
Also, the heavy reliance on food imports contributes to Nigeria’s Trade deficit. The gap between imports and exports widens as the country spends more on bringing in food items than it earns from exports. The substantial import bill strains Nigeria’s foreign exchange reserves. The Central Bank of Nigeria has frequently highlighted the impact of food imports on the nation’s foreign reserves and the naira’s stability. So, dependence on imports undermines this sector by reducing the market for locally produced food. Farmers struggle to compete with imported goods, which are sometimes cheaper due to Subsidies in exporting countries.
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Investing in agriculture and working to achieve its development will ensure that these problems do not trouble the country again. It will help diversify the economy, reducing over-reliance on oil and gas. This diversification makes the economy more resilient to global oil price fluctuations and economic shocks. It will also lead to rural development by improving infrastructure, such as roads, schools, and healthcare facilities. Of course, raw materials will be sufficiently supplied to various Agro-based industries, such as food processing, textiles, and pharmaceuticals. Finally, products, such as cocoa, palm oil, rubber, and Sesame seeds, are important Export commodities for Nigeria. They generate foreign exchange earnings, which are vital for the country’s balance of payments and economic stability.