June 30, (THEWILL) – The worsening spate of insecurity across the country appears to be receiving a residual attention in real terms while agricultural, the major affected sector, is declining speedily.
The Federal Government insists it is paying enough attention to agriculture aimed at boosting food production. Recently, it disclosed that activities in the agricultural sector, particularly the harvest of crops led to the injection of N309bn into the Nigerian economy in the past year.
It also revealed that Nigeria is currently working in partnership with Brazil to provide agriculture mechanisation hubs across the federation, adding that about N1.6bn (N995,000) was being used for this.
However, facts on ground do not attest to this success story claim.
For several years, food inflation has been the key driver of Nigeria’s running inflation which hit a three-decade high of 33.95 percent as of May 2024. Food inflation rose to an all-time highs of 40.6 percent during the period.
“In May 2024, Nigeria’s food inflation rate reached 40.66 per cent on a year-on-year basis, a significant increase from the 24.82 percent recorded in May 2023. It is also higher than the 40.53 per cent recorded in April 2024.
“This sharp rise in food prices has been attributed to a range of factors affecting various food categories,” the NBS said.
At the centre of the problem is insecurity, and the government seems more occupied with providing infrastructure which may not be functional given the current security challenge that has bedeviled the country, especially in the past nine years.
Thousands of farmers have been killed and their farmlands deserted. Many are now living in the internally displaced persons (IDP) camps where they are languishing in penury, disease and melancholy. There cannot be food production under this situation and that explains the unprecedented high cost of food in the country.
The agricultural sector in the first quarter of 2024 grew by 0.18 per cent (year-on-year) in real terms, an increase of 1.08 per cent points from the corresponding period of 2023, and a decrease of 1.92 per cent points from the preceding quarter which recorded a growth rate of 2.10 per cent. It grew on a quarter-on-quarter basis at -32.25 per cent.
However, the sector contributed 21.07 per cent to overall GDP in real terms in Q1 2024, lower than the contribution in the first quarter of 2023 and lower than the fourth quarter of 2023 which stood at 21.66 per cent and 26.11 per cent, respectively.
The growth the sector recorded in Q1 2024 was the first in a long while – manifesting the trouble of the sector that is a priority to human existence.
Stakeholders have expressed concern that Nigeria’s agricultural sector has been on a continued decline in the past seven years – since 2017. This is not good news for the consumer goods firms who depend on the sector for local sourcing of their raw materials under the backward integration scheme.
According to data by the National Bureau of Statistics (NBS), aside from the second quarter (Q2) of 2016 when agriculture achieved a real gross domestic product (GDP) growth rate of 4.5 percent year-on-year, the sector has maintained an uninterrupted slide in the past seven years. The facts speak:
In Q2 2017, agriculture declined to a growth rate of 3.01 percent (from 4.5 percent in the corresponding period of the previous year), before it hit 1.19 percent in Q2 2018. The fortune of this strategic sector, which is the largest employer of labour, rose marginally to 1.79 percent in Q2 2019, then plunged to 1.58 percent in Q2 2020.
Although the overall GDP growth rate rose to 3.40 percent in Q2 2021 from -1.92 percent in the previous year’s equivalent period, the positive trend did not impact on agriculture: The sector, instead, nosedived to a 1.3 percent growth rate in Q2 of that year. It then sank deeper to 1.2 percent in Q2 2022, before recording a stunted growth of 1.50 percent in Q2 2023.
In all, while the overall contribution of agriculture to GDP hovered on the average of 23 percent during the seven-year period, the receding fortune of this sector was a major concern to the consumer goods firms. This is because the consumer goods firms rely significantly on agriculture to source their local raw materials under the backward integration policy.
The International Monetary Fund (IMF) has urged the Nigerian government to confront the rising food insecurity squarely to save the citizens from possible extinction.
“Amid annual food price inflation of 35.4 per cent, the spiraling cost of living has triggered sporadic protests across the country and looting of food reserves in areas including the capital, Abuja. At least 40 per cent of Nigeria’s population of more than 200 million live in extreme poverty,” the IMF said.
The Chief Executive Officer of CFG Advisory, Mr Tilewa Adebajo, stressed the need for the Nigerian government to address the challenge of insecurity plaguing the agricultural sector.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
