Agriculture is intricately connected to Nigeria’s economy, contributing significantly to employment, GDP, and food security. It remains a key factor in improving the value of the Naira against the Dollar, particularly as the country seeks to diversify its foreign exchange sources beyond crude oil.
While crude oil traditionally dominates Nigeria’s foreign exchange earnings, agriculture has always come a close second and remains vital today. With Nigeria’s population expected to reach 400 million by 2050, increasing agricultural productivity is essential to ensuring food security, fostering national growth, and strengthening the country’s economic base.
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The agricultural sector remains a cornerstone of the economy, contributing approximately 20% to the country’s GDP and employing over 60% of the labour force. The four main subsectors of agriculture in Nigeria are crop production, fishing, livestock, and forestry—with crop production being the most significant, accounting for around 90% of the sector. There is an untapped potential within Nigeria’s agricultural landscape; Nigeria’s diverse ecological zones are suitable for various crops and livestock, which could be leveraged to attract Foreign Direct Investment (FDI).
In this article, I will provide an in-depth analysis of Nigeria’s agricultural sector, underscoring the challenges that limit its critical role in the nation’s economic growth, and suggesting policies to transform Nigeria into a national and global food basket with the added advantage of export forex growth.
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A contentious issue remains whether Nigeria should, at this time, prioritise food exportation to generate foreign exchange or focus on local consumption to ensure food availability and security. A thriving agricultural export strategy can significantly enhance Nigeria’s financial standing, but achieving this requires the development of value chains, adherence to international quality standards, and diversification of export markets beyond oil.
The potential advantages of agricultural exports, for example improving Nigeria’s balance of payments and addressing foreign exchange issues, cannot be over-emphasised. However, sustained internal food instability or insufficiency can undermine these economic benefits. Any form of food insecurity calls for urgent action to address this first before we look at potential export growth from the agricultural sector.
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There is an ongoing debate: Should we ban agricultural exports to ensure local food availability or encourage exports to generate the much-needed foreign exchange? Looking at the government’s recent decision to open the borders and implement zero import duty on food imports to ensure food sustainability, one may question whether this policy truly aligns with the broader goal of promoting agricultural exports for foreign exchange.
At a recent webinar I conducted, we administered a pre-webinar poll asking attendees two questions:
a) Do you think exporting food will worsen Nigeria’s food crisis?
b) Do you think many of the current government policies support improved agricultural production?
Keeping in mind that most of the participants during the aforementioned webinar are connected with non-oil export processes and advocacy, the results showed that 63% of attendees feel that exporting food will not worsen Nigeria’s food crisis. For the second question, 56% of the participants said that some current government policies support food production.
A cursory look at the challenges posed by Nigeria’s trade deficits, particularly in the agricultural sector, shows a growing gap between agricultural exports and imports, with the latter significantly outpacing the former. In 2020, Nigeria’s food trade deficit reached a staggering ₦1.3 trillion, highlighting the urgent need for measures to enhance domestic agricultural productivity.
Insufficient agricultural productivity
Small-scale farmers form the backbone of Nigeria’s food production. However, these farmers are limited by almost insurmountable challenges such that their combined efforts do not even scratch the surface of meeting the food demands of the local (national) population.
Our farmers face so many challenges, notably paying security fees or ransoms to ensure the safety of their crops. In recent times, farmers have been unable to even visit their farms due to security concerns. Paradoxically, the same security challenges have drastically impacted the nation’s ability to attain up to 50% of its OPEC crude oil exports quota of about 2 million bpd. These issues directly impact the affordability of local agricultural products and contribute to inflation. The farming insecurity issues also directly affect the affordability of locally available agricultural products while passing on inflation to consumers.
Other challenges faced by farmers and agriculture produce stakeholders include:
● Inadequate Infrastructure: A lack of proper infrastructure means farmers cannot fully utilise even advanced farming equipment. There are serious issues with transportation and access to modern mechanisation.
● High Costs of Mechanisation: The cost and logistics of mechanisation can be uneconomical for many farmers, especially small-scale ones. The distance between farms and mechanisation service providers. Rental of needed equipment, and rising fuel costs make it difficult to use machinery. Farmers often resort to manual labour, which further hinders productivity.
● Outdated Farming Practices: Many farmers still rely on crude agricultural methods rather than modern, mechanised techniques. This contributes to lower yields and inefficiency.
● Lack of Storage and Preservation Facilities: Inadequate storage and preservation facilities lead to massive post-harvest losses, spoilage, and low-quality produce.
● Poor Access to Markets: Small-scale farmers often struggle to access markets and negotiate fair product prices. This lack of market access impacts their profitability and ability to grow their operations. This has often led to repeated occurrence of the boom-bust cycle where, sometimes, the absence of a ready (profitable) market leaves the farmers with a glut and demotivates them from further production of these crops during the next farming season.
● Rejection of Exported Produce: Nigerian exporters face ongoing issues with the rejection of exported produce due to quality and preservation issues. Again, this impacts their ability to engage in international trade.
● Dependence on Imported Goods: The failure to add value to exported agricultural products leads to a reliance on imported processed goods at higher prices, thus depleting foreign reserves.
A closer examination of the above-mentioned issues indeed holds the many answers that can serve as foundational blocks for Nigeria to balance the use of food exportation to generate foreign exchange, while still focusing on local consumption to ensure food availability and security
In addition, when Nigeria attains a state of equilibrium, balancing its local needs with accessing global market opportunities, a transformation of the agricultural sector awaits us. How so? Are there other countries that have walked these paths? How well did they fare? These are questions that I address in the second part of this series.
Olufemi Boyede, CITP – [email protected]
International Consultant & Member,
BoT Network of Practising Non-oil Exporters of Nigeria (NPNEN)
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