Prior to 1970, agriculture was the mainstay of the Nigerian economy. Between 1960 and 1970, on average, the sector accounted for about 50 percent of the GDP and employed 72 percent of the labour force.
In the 60s, Nigeria was the world’s largest exporter of groundnut, the second-largest exporter of cocoa and palm produce, and an important exporter of rubber and cotton.
The Central Bank of Nigeria’s report for the year 2000 revealed that, in 1970, the country produced 305,000 tons of cocoa, 800,000 tons of palm oil and kernel, and over one million tons of groundnut.
The sector also employed over 70 percent of the labour force, fed the population estimated at 55 million and 60 million in 1963 and 1965 respectively.
In the same period, the export of cash crops earned Nigeria about 70 and 62.2 percent respectively. The dominant position of the agricultural sector in this period was, therefore, not in doubt as well over 50 percent of the country’s total export earnings came from the agricultural sector. Thus, in the first decade of independence, primary agricultural produce was the main export.
However, as from the 70s, exports have been dominated by crude oil. From 1974 to date, there had been no year when the proportion of crude oil exports in total export earnings fell below 91 percent. Over time, the dependence on crude oil revenue has made the national economy vulnerable to global market prices.
For instance, in 2015, the sharp and continuous decline in crude oil prices led to a decline in oil revenue and foreign exchange earnings by over 60 percent, coupled with a failure to diversify the sources of revenue and foreign exchange in the economy, Nigeria suffered greatly from the shock of oil prices because the economy did not have any source revenue to support the decline from oil export.
What seems to be more disturbing is the fact that the number of people living in abject poverty in a big oil-producing country like Nigeria continues to increase dramatically over the last 30 years while its level of external debts also continues to increase. In short, oil exports as a revenue source for development does not seem to be a panacea.
Since then, economic experts have expressed their fears that Nigeria may be on the brink of economic collapse if it fails to find another alternative to crude oil exploration.
This has made Nigerians call for the diversification of the economy through continuous investment in other sectors but with more focus on agricultural production.
Will agricultural investment be the long-awaited panacea?
In a recent interview with Channels TV, the Nigerian president revealed that the only way the country’s economy can witness a turnaround is through continuous investment in agriculture.
However, historical economic experiences of nations prove that most less developed and developing economies are characterised by high dependence on agricultural development while the developed countries are characterised by the dominance of manufacturing and service sectors.
For instance, the research findings by the United Nations Economic and Social Commission for Asia and Pacific (UNESCAP) asserts that the development of agricultural productivity should play a larger role in closing the gap of economic development in less developed countries but these countries should avoid the traps of focusing on agricultural productivity at the detriment of other sectors.
The research further revealed that one of the major reasons why poverty continues to increase in most Less Developed Countries (LDCs) is the fact that agriculture continues to be a dominant source of livelihood in these countries, yet the contribution of agriculture to their GDP continues to remain significantly low.
Going further, evidence from the “Least Developed Countries report” revealed that in developed countries, service sector contributions to their GDP are relatively high.
Their reports further cited LDCs in Asia such as Bangladesh, Cambodia Myanmar, etc that keep achieving faster growth rates as a result of higher productivity in their manufacturing and service sectors. Their suggestion is that beyond agriculture, African countries must continue to invest in technology, and generate employment in other sectors.
In the revelations of the United Nations Conference on Trade and Development (UNCTAD), “developing countries are yet to tap from the increasing benefits of globalisation and are still lagging behind due to factors such as poor governance, geographical issues, and security.
There is the lack physical infrastructure, shortage of skilled manpower, high cost of transactions and security is inadequate”.
This assertion proves that there is more to economic development beyond the increase in agricultural activities.
Just like oil and gas, prices of agricultural products are also volatile and less competitive.
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Due to the fact that no country is self-sufficient, nations unavoidably trade with several others so as to enjoy goods and services for which it has a comparative disadvantage in its production while giving out those goods it has a comparative advantage in.
This is the case with Nigeria where a sizeable majority of its labour force is employed in the extractive sectors while others are employed in the manufacturing and tertiary sectors. Given the large labour force and other favourable natural conditions, it gives the country a comparative advantage in agricultural products such as palm oil, wood products, cocoa beans, aluminium, coffee, cotton, banana, etc.
However, recent information has it that just like in the case of oil and gas, most agricultural exports in Nigeria have witnessed a decline in revenue due to fluctuations in world prices. More disturbing is the fact that most of these products have been discovered to be of low quality and are considered less competitive as compared to processed goods bought from other countries around the world, thus, leading to unfavourable terms of trade.
Agriculture will not be competitive enough to offset its growing external debts.
Recently, it was revealed that Nigeria has borrowed billions of dollars from other developed economies while its exchange rate in dollars continues to remain high. The Nigerian president in response to these issues revealed during his recent interview that Nigerians need to go back to the farm so that the country can earn more revenue to offset its debts.
However, for most developing economies, the extractive sectors are characterised by a low level of competitiveness due to the fact that their respective governments do not seem to make frantic efforts to promote value chain before final export which implies that the finished products of their produce would now be sold at a relatively high price and consequently leading to a negative balance of payment because the finished products of such raw materials would eventually be bought at an unfavourable rate of exchange by the less developed countries.
Agricultural investment might just lead to more specialisation.
Diversification is not the idea that we should leave other sectors and focus on another.
The main reason why a country needs to diversify is to ensure that all of its sectors perform optimally.
Therefore, going back to the farm is just another way of moving from one specialisation to the other. Thus should everyone decide to embrace agriculture, what will happen to the manufacturing and service sectors that are more paramount for economic development?
In conclusion, it is expected to think that an increase in farm income would reduce poverty due to the fact that food expenditure is a sin qua non for every household, however, the reduction of poverty through food supply might not always be guaranteed.
Therefore, the government should know that there is more to economic development and sustenance beyond growth in the agricultural sector. This is because people can continue to farm and the country will continue to remain poor.
Without any iota of doubt, industrialisation remains an important strategy for ensuring economic sustainability. In this case, the government should embrace a grassroots approach to development. This approach will be more effective if the government can ensure that each local government has a particular industry depending on the type of natural resource and labour resources that exists in each area.
Also, there is the need for us as a people to look inward for developing a quality labour force through human capital development. This is because no tangible growth can take place in any sector if the nation cannot produce high-quality individuals.
Human capital development if properly harnessed can positively contribute to the development of the country at large.
Continuous investment in education and health predominantly pays off in terms of achieving higher productivity in all sectors. Therefore, the primary focus of any economic plan should be directed towards boosting the educational and health sector in Nigeria.
