April 9, 2019

A few good steps for agriculture

Agriculture is currently being positioned as a potential backbone for Nigeria’s economy. The sector is one of few that have benefitted from policy continuity after the change in administration four years ago. However, agricultural GDP growth has not accelerated at the desired pace. Over the past eight quarters, the sector has grown by an average of 2.7% y/y. In Q4 2018, it expanded by 2.5% y/y. The slow pace of growth is partly linked to output losses due to poor storage, logistics issues and challenges in the middle belt. Furthermore, export activities (particularly with neighbouring countries that have porous borders) by farmers which are not formally captured result in distorted data.

                                                                                                                  

  • To reduce post-harvest losses, the FGN has adopted a new transportation model which will connect eleven states in the Lagos-Kano-Jibiya (LAKAJI) corridor. The corridor is a 1,225 km transport route that runs from Lagos state through the commercial centre of Kano state before ending in Jibiya, Katsina state, which is near the Niger Republic border.

  • This transport corridor, when completed, should promote ease of distribution as farmers will be able to arrange pick-up from the farm-gate or transport produce to designated aggregated zones or commodity markets.

  • During our most recent visit to Abuja, we learnt that the authorities are currently considering solar-generated energy for large-scale refrigeration and freezing of perishable goods, before transporting from points of production in the Northern region to markets in Southern Nigeria. This will also assist with curbing output losses.

  • The narrative around agriculture in Nigeria is gradually changing. Based on official data, the average age of farmers over the past 40 years has been between 50 -75 years. However, over the past four years, there has been an influx of young adults into the sector, aged 30 -40 years. Its value chain is broad and provides an opportunity to boost job creation as well as promote entrepreneurship.

  • Farming has also received support from technology services. For example, due to the high cost of securing tractors, small-scale farmers struggle with producing high yields. However, in mid-2014, an app (Hello Tractor) which connects tractor owners and small-scale farmers was introduced in Nigeria.

  • The app enables small-scale farmers to request and pay for tractor services via SMS and mobile money, as and when they need specific services.

  • The shift towards export-orientation could be achieved quicker using agricultural products. Therefore, we view the CBN’s recent announcement to extend a N200bn facility to farmers for exportation of Agric-related products as a step in the right direction.

  • As with most sectors, to boost economic activity, structural deficits such as power shortages still need to be addressed. Furthermore, promoting technology and training farmers will have a lasting effect on the sector.