Shocks from the COVID-19 pandemic have hit Nigeria in a time when its absorbers are best defined as weak. It has worsened the precarious state of the economy, costing Nigerians their jobs, weakening economic growth and increasing the number of poor masses.
To help save lives, prevent increase in poverty rate and protect livelihood of the poor and vulnerable, the federal government must reprioritise public spending, focus more on expenditures aimed at stimulating and developing the economy. One way will be to lessen the COVID-19 induced pressures on the Nigeria agricultural sector.
It has gotten to a point where all hands must be on deck to rebuild a more vibrant and sustainable economy. The federal government’s “I am self sufficient and well able” thinking and policies will not work, hence, the private sector must be carried along.
In every economic crisis, households bear the brunt eventually through increased cost of living, job losses, health complications etc. Households account for more than 70 percent of GDP. Hence, it only makes sense that policy options that can help mitigate the effects of the crisis on this group must be focused on. This will help lay the foundations for a strong economic recovery, generating more jobs and improving employment.
The Nigeria agricultural sector has remained a major contributor to the economy compared to other sectors. In 2019, the sector contributed 22.12 percent to Nigeria’s nominal GDP coupled with the fact that the sector employs about 70 percent of Nigeria’s working population. The sector is also the largest economic activity in the rural area where almost 50 percent of the population lives.
However, the outbreak of the COVID-19 pandemic has caused the sector to contract. It has brought to the fore many of the existing structural challenges in the sector. Farmers and dealers of agricultural goods struggled through the lockdown, as security agents routinely declined to grant ease of passage. With farmers unable to access their farms, some that should have harvested during the months coinciding with the lockdown were unable to, while those that should have been preparing their land for the planting season were equally restricted.
According to the International Food Policy Research Institute (IFPRI), the agriculture sector contracted by minus14 percent in April/May 2020. Export crops such as sugarcane, beverage crops, export crops declined 47 percent, 45 percent and 58 percent respectively due to falling export demand and input supply disruptions. These crops account for less than 1 percent of agriculture GDP.
Also, decline in investment spending and construction activities reduced demand for timber and wood products. This led to a minus 25 percent plunge in the forestry subsector which accounts for 1.1 percent agriculture. Root crops which are the largest food group and agriculture subsector in Nigeria accounting for 43.3 percent of the sector’s GDP contracted by 5 percent. In terms of value of activities, this is huge. Other subsectors moved in a similar direction.
Moreover, the shut down of Indorama, a leading fertiliser producer, was termed the major challenge for farmers in this difficult time. Fertilisers are needed to supplement required elements found naturally in the soil for improved output. Farmers now have to find a way of multiplying their farm harvest else food shortage awaits Nigeria in 2021.
Projections by some agricultural commodity producers shows that productivity this year could reduce by an average of up to 47.5 percent.
Nigerians face a harsher reality of food shortage, job losses; if reforms and policies are not initiated. Food shortage means higher prices amid excess demand. With higher prices adding to inflationary pressures, Nigerians are worse off with no corresponding increase in income due to high job losses.
With such reforms targeted at increasing the productivity of farmers as well as the storing and processing capacity of agricultural produce, Nigeria would be able to mitigate the negative effects of the pandemic, while generating more jobs.
Without bold reforms, strong fiscal and monetary policy actions, the World Bank warns that the macroeconomic implications of COVID-19 in 2020 and 2021 will be severe – including the loss of life, and the possibility of five million more Nigerians being pushed into poverty – even if Nigeria manages to contain the spread of the virus.
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