October 12, 2019Agric DigestEventsMost viewedTrending
Agriculture continues to play a major role in the Nigerian economy, accounting for approximately 70% of jobs and representing 26% of GDP. Since the 2016 recession, the sector has received intensified attention from the government and businesses as a crucial way to diversify the largely oil-focused economy. Crop production is by far the largest sub-sector, accounting for nearly 90% of agriculture’s nominal GDP, with livestock, forestry and fishing together comprising the remaining 10%.
According to the UN’s Food and Agriculture Organisation (FAO), Nigeria had an estimated 70.8 million hectares of arable land as at 2016, of which around 40% is currently under cultivation. Farming in Nigeria is a dispersed activity carried out mostly by rural smallholders, which creates limitations on cultivation levels. Depressed productivity in the sector is attributed to low usage of improved seeds by farmers, poor quality of inputs, little or no access to credit and an ageing farming population.
As part of efforts to diversify the economy, the government has introduced a number of incentives to encourage agricultural growth by supporting both the supply and demand sides of the market. In terms of supply, the Central Bank of Nigeria’s 2015 Anchors Borrowers programme aimed to boost production and create a steady market for smallholder farmers by linking them with businesses that process agricultural products.
That same year the government introduced demand-side support in the form of a food import ban that prohibited access to foreign exchange for 41 items including rice and poultry. In mid-August 2019 President Muhammadu Buhari doubled down on this policy, directing the central bank to stop all foreign exchange for food imports. As of the end of the month, the central bank had not confirmed that it would undertake to do so. The effectiveness of the initial measure has been inconsistent. For example, although the Minister of Agriculture and Rural Development disclosed that rice imports fell by 95% between 2014 and 2017 from 1.23 million tonnes to 23,192 tonnes, illicit rice continues to enter the country from neighbouring Benin, which has recorded an increase in rice imports from Thailand since the ban.
The value chain of crop production begins with agricultural inputs which are sourced and planted by farmers before harvesting. Government programmes, such as the Anchor Borrowers scheme, help to provide quality inputs to farmers and thus raise yields. However, a persistent belief among rural farmers that saved seeds are as good as certified seeds combined with a lack of capital to purchase new seeds means most rural farmers continue to use saved seed. Once crops are harvested, they are either purchased by agriculture processing companies or exported for further processing.
Connecting players efficiently across the value chain has been a major challenge to sector development given the fragmented nature of most farming activity. Across Africa, private sector innovation is supporting better integration of agricultural players, particularly around financial inclusion which is crucial to developing the capacity of small-scale farmers to participate in large-scale markets.