Nigeria stands as one of Africa’s most resource-rich nations, blessed with vast oil reserves that have significantly shaped its economy for decades. However, this dependence on oil has come at a cost, especially when it comes to the broader diversification of the economy. One of the most critical sectors that have been neglected in the rush for petroleum wealth is agriculture—a sector that holds immense potential for addressing food security issues and driving sustainable economic growth.
As global dynamics shift and oil prices remain volatile, the need for Nigeria to leverage its oil revenues to boost other key sectors, particularly agriculture, has never been more urgent. With the world moving towards renewable energy sources and a gradual decline in global oil demand, Nigeria must now focus on reinvesting its oil wealth into sectors that promise long-term stability. Agriculture, with its potential to generate employment, enhance food security, and promote rural development, is a logical and vital area of focus.
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This opinion piece explores how Nigeria can effectively use its oil revenues to transform the agricultural sector, addressing the pressing issue of food security while laying the groundwork for a more resilient and diversified economy.
The oil boom and its impact on Nigeria’s economy
Since the discovery of oil in Oloibiri in 1956, Nigeria has become synonymous with oil production. The country’s oil and gas sector accounts for around 90% of its export revenue, making it a vital part of the national economy. This dominance, however, has created a dangerous dependency, leading to the underdevelopment of other sectors, particularly agriculture. Once the backbone of Nigeria’s economy, agriculture has seen its contribution to GDP shrink from 57 percent in the 1960s to less than 25 percent today.
The consequences of this shift are apparent. Despite its rich soil, favourable climate, and vast arable land, Nigeria has struggled with food insecurity, relying heavily on imports to meet the needs of its growing population. According to the World Food Programme, more than 13 million Nigerians face acute food insecurity, a situation exacerbated by conflict, climate change, and economic instability.
The country’s reliance on oil revenue has also made it vulnerable to global oil price fluctuations. When oil prices crash, as seen in 2014 and again during the COVID-19 pandemic, Nigeria’s economy suffers, leading to reduced government spending, increased unemployment, and economic hardship for millions. This boom-and-bust cycle highlights the need for a more diversified economy—one that can weather global shocks and provide sustainable growth.
The untapped potential of agriculture
Nigeria’s agricultural sector is a sleeping giant. With over 84 million hectares of arable land, abundant water resources, and a young and growing population, the country has the potential to become a major player in global food production. Yet, despite these advantages, agriculture in Nigeria remains largely underdeveloped, plagued by low productivity, inadequate infrastructure, and limited access to finance and modern technology.
In contrast to the oil sector, agriculture has the potential to create widespread employment opportunities, particularly in rural areas where poverty rates are highest. According to the National Bureau of Statistics, agriculture employs around 35 percent of Nigeria’s labour force, but with proper investment and support, this number could grow significantly. By investing oil revenues into agriculture, Nigeria can create millions of jobs, reduce poverty, and address the root causes of rural-urban migration.
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Moreover, agriculture is not just a domestic opportunity; it is a global one. With the world’s population expected to reach 9.7 billion by 2050, the demand for food will only increase, offering Nigeria the chance to become a major food exporter. This would not only boost foreign exchange earnings but also reduce the country’s reliance on oil exports, creating a more balanced and resilient economy.
“It is a sector that can lift millions of Nigerians out of poverty and ensure that the country can feed its growing population without relying on imports.”
Reinvesting oil revenues: A strategic approach
To effectively use oil revenues to boost agriculture, Nigeria must adopt a strategic and coordinated approach, focussing on key areas that can deliver the greatest impact. Below are some critical steps the country can take:
Investing in infrastructure: One of the biggest challenges facing Nigerian agriculture is the lack of adequate infrastructure, including roads, storage facilities, and irrigation systems. Poor infrastructure leads to high post-harvest losses, increased costs, and reduced access to markets. By using oil revenues to build and upgrade rural infrastructure, Nigeria can improve the efficiency and profitability of its agricultural sector, making it more attractive to investors and entrepreneurs.
Providing access to finance: Access to finance remains a significant barrier for many farmers in Nigeria, particularly smallholder farmers who make up the majority of the agricultural workforce. The government can use oil revenues to establish targeted agricultural finance programs, offering low-interest loans, grants, and other forms of financial support to farmers and agribusinesses. These programs should be designed to reach underserved communities, including women and youth, who often face additional barriers to accessing finance.
Promoting agricultural research and innovation: To increase productivity and competitiveness, Nigeria must invest in agricultural research and innovation. This includes developing and disseminating new technologies, such as improved seed varieties, climate-smart farming practices, and mechanisation. By supporting research institutions and collaborating with international partners, Nigeria can drive innovation in agriculture, helping farmers to produce more food with fewer resources.
Strengthening agricultural value chains: Nigeria’s agricultural sector is characterised by fragmented value chains, with many farmers unable to access the processing, marketing, and distribution networks needed to get their products to market. By investing in value chain development, the government can help farmers add value to their produce, increase their incomes, and create more jobs in rural areas. This could include supporting agro-processing industries, establishing cooperatives, and improving market access through better transport and logistics networks.
Encouraging private sector investment: While government investment is critical, the private sector also has a vital role to play in developing Nigeria’s agricultural sector. The government can use oil revenues to create a more favourable business environment for private investors, offering incentives such as tax breaks, subsidies, and public-private partnerships. By de-risking agricultural investments, Nigeria can attract more domestic and foreign capital into the sector, driving growth and innovation.
Boost food security through hydroponic farming: As Nigeria continues to seek ways to diversify its economy and improve food security, hydroponic farming presents a promising solution. By strategically investing petroleum revenues in the development of hydroponic infrastructure, research, and capacity building, Nigeria can harness the potential of this innovative agricultural technique to ensure a secure and sustainable food supply. Hydroponic farming not only addresses the challenges of traditional farming methods but also offers new opportunities for growth, job creation, and environmental sustainability. Through this forward-thinking approach, Nigeria can transition from an oil-dependent economy to an agricultural powerhouse that leads the way in modern farming practices.
A path to food security and sustainable growth
By reinvesting its oil revenues into agriculture, Nigeria has the opportunity to not only boost food security but also create a more diversified and resilient economy. Agriculture offers a path to sustainable growth, providing jobs, reducing poverty, and increasing foreign exchange earnings. It is a sector that can lift millions of Nigerians out of poverty and ensure that the country can feed its growing population without relying on imports.
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However, achieving this vision will require strong political will, effective governance, and a commitment to long-term planning. The government must prioritise agriculture in its development agenda, ensuring that oil revenues are allocated to the right projects and programs. It must also engage with stakeholders across the agricultural value chain, including farmers, agribusinesses, and civil society, to ensure that investments are well-targeted and meet the needs of those on the ground.
Ultimately, the future of Nigeria’s economy will depend on its ability to diversify away from oil and build a more inclusive and sustainable growth model. By harnessing the power of agriculture, Nigeria can turn its oil wealth into lasting prosperity, creating a brighter future for all Nigerians.
About author:
Toyin Banjo is the Vice Chairman of BonnyLight Energy and Offshore Limited as well as the Chief Executive Officer of Oriental Capital and Asset Management Group.
