The weak links in the agricultural narrative

Agricultural GDP growth slowed from 4.1% in 2016 to 3.5% last year, and to 3.0% y/y in Q1 2018. The sector therefore is still expanding in per head terms but not at a pace to achieve the transformation sought by the previous and the current administration. The high hopes in terms of job creation, self-sufficiency and value addition through processing have not yet been realized. Agricultural exports and imports totaled N170bn and N887bn in 2017 according to the NBS international trade series.     


  • We can say that the FGN underfunds the sector although it has numerous competing claims for its limited funds. The 2018 budget allocates N54bn and N149bn (US$490m) to the agriculture and rural development ministry for recurrent and capital spending respectively.
  • Agricultural research institutes have received an average of N28bn (US$90m) annually over the past five years according to local media analysis. The comparable figure for India, with six times the population, is closer to US$2bn. The consequences for Nigeria have been predictable, including: a paucity of seeds and seedlings, limited interaction between the institutes and farmers, strikes by researchers and a trend for international bodies to fund institutes elsewhere (such as Ghana for cocoa).
  • The CBN has played a role in sector financing since 1977. Its most visible current initiative is the anchor borrowers’ programme. It is lending and providing guarantees where commercial banks are reluctant to tread alone. For example, it provided N25bn to the Sunti Golden Sugar Estates in Niger State through a consortium of banks at a single-digit interest rate.
  • There are promising initiatives in place such as the value chain development programme, launched by the FGN and the UN’s IFAD. They are however undermined by insecurity across many growing areas, resulting in production losses, pressure on food prices and large-scale internal displacement.
  • We see domestic production as the priority, and agricultural exports as a useful bonus. A success story in the recent news has been sesame seeds, the second largest agricultural export by value (after cocoa). Nigeria exported 300,000 metric tonnes (MT) in 2017 and looks to achieve 500,000MT this year. The crop grows in arid conditions, the product scores well for its healthy attributes and the industry has found some good export markets (China, Turkey and Japan). Processing to add value, however, is very limited.
  • The sector’s expansion has slowed, and we sense that the reforming momentum has lost some of its edge. It may be that the challenges arising from the neglect of the sector over four decades have been underestimated.

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