• Friday, March 29, 2024
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BusinessDay

FG’s agricultural investments fail to show in GDP growth

agriculture (1)

The Federal government’s claim of funding in the agricultural space is yet to have as much impact in lifting the sector to its 2016 level, when falling oil prices alongside restlessness in the Niger Delta region made the country look towards the sector as its only redemption.

Since the country exited recession in the second quarter of 2017, growth in the agricultural sector has averaged 2.7 percent compared to an average of four percent prior to the exit, as oil sector gains momentum on increasing production and a rise in global crude oil prices.

In full year 2016, the same year the country entered recession, growth in the agricultural sector stood at 4.11 percent, a 0.39 percentage point increase from the 3.72 percentage growth recorded in 2015. This growth however saw a decline to 3.45 percent in 2017.

Data from the National Bureau of Statistics show that growth in the agricultural sector was up 1.91 percent in third quarter of 2018, after falling for three consecutive quarters, recording its lowest performance since 2015 in third quarter of 2018 at 1.19 percent.

Similarly, the value of agricultural goods export in third quarter 2018 was 47.2 percent lower than second quarter 2018 but 57.18 percent higher the value in the same period last year, according to NBS data on foreign trade statistics. However, the value of imported agricultural products in third 2018 was largely unchanged compared to the value recorded in the second quarter, but 3.10 percent lower the amount a year earlier.

Nigeria’s top agricultural exports in the third quarter were Cashew nuts which brought in N9.85 billion, followed by Sesamum seeds (N9.0 billion) and Superior quality raw cocoa beans which brought in N7.6 billion. As a percentage of total exports earnings, agriculture accounted for just 0.93 percent of export earnings and 5.38 percent of import cost in the third quarter of 2018.

As a percentage of exports, the share of agriculture has remained largely below two percent since 2015 despite the government’s push for Nigerians to adopt agriculture, which is the main stay of the economy. Sources in the agricultural sector say this mainly so because the government has emphasized farming for consumption rather than for exports.

“Most of our agricultural produce are no longer admitted into the economies of many western countries of the world due to lack of standardisation of such produce as Nigeria is yet to adopt the appropriate standards that will enable it meet global standard, which may serve as a constraining factor”, Johnson Chukwu, CEO Cowry Asset management limited.

“Also the growth of 1.91 percent can be attributed to several other sectors among which is the flooding we had in most parts of the country, the displacement of farmers in the northeast which is now spreading to the northwest and the north central which has contributed to the slow growth of the agricultural sector despite government’s presumed supports for the sector,” Chukwu noted.

The Nigeria’s agricultural sector employs the highest number of the labour force, according to recent NBS data, yet it contributed only 29 percent of the GDP figure in Q3 2018. “This shows that productivity is low hence needs to be unlocked”, said Gbolahan Ologunro, an equity research analyst at Lagos-based CSL Stockbrokers.

Total imports of agricultural products from January to September of 2018 was N633 billion according to NBS data. This is slightly below the N887 billion spent on agricultural imports in 2017, an indication that the country is on track to meet the 2018 spend on agriculture.

Economic policies formulated by the Buhari administration which were having positive impact initially are gradually losing grip as the sector is still confronted with several bottlenecks. These range from insecurity, poor storage facilities, poor road networks, insufficient funding, and weaker demand for agricultural produce.

Sources have also told BusinessDay the government talk about agriculture has not been matched with action. The government has made little or no effort to improve the seedlings for farmers while extension services for farmers is still almost absent in many rural areas. This means that actual farming practices has not changed much.

Despite various initiatives set up by the CBN, including the anchor borrower scheme and commercial agricultural credit scheme, the impact on the agricultural sector has not really been pronounced due to structural barriers like hindering productivity, says Ologunro.

“For us to feel the impact of these funding/ investments in the sector, the fiscal sector needs to complement with the monetary activities for us to be able to unlock productivity in that space”, Ologunro told BusinessDay.

On November 2015, CBN on behalf of the government flagged off the Anchor Borrowers Programme (ABP), aimed at providing farm inputs in kind and cash (for farm labour) to smallholder farmers to boost production of their commodities, and generate millions of jobs for unemployed Nigerians.

“Since the commencement of the (Anchor Borrowers) Programme in November 2015, we have disbursed over N100 billion to more than 800,000 smallholder farmers in the rural communities in Nigeria that require less than N250, 000 to cultivate one hectare of land and who never had access to finance,” Godwin Emefiele, the central bank governor said on the side-lines of a two-day Nigeria Investment Conference organised by CFA Society Nigeria.

Similarly, the Presidential Fertilizer Initiative (PFI) was also launched in December 2016 as an outcome of a partnership between the Governments of Nigeria and Morocco, to achieve a local production of one million metric tonnes of blended Nitrogen, Phosphorous and Potassium (NPK) Fertilizer for the 2017 wet season farming and an additional 500,000 metric tonnes for the dry season.

The Youth Farm Lab (YFL), the Presidential Economic Diversification Initiative (PEDI), and the Food Security Council (FSC) amongst others, are also part of the programmes developed by the current administration to give a facelift to the agricultural space.

However, in spite of these much louder programmes and development aimed at tackling the maladies seen in the agricultural sector, not much growth have been seen this year as farmers still cite post-harvest losses as being the major challenges of the sector.

MICHEAL ANI