Nigeria is currently facing a forex crisis that has seen the country’s currency (Naira) depreciate to about N800/$1. This is partly due to Nigeria’s inability to generate revenue by engaging in foreign trade with other countries. This situation is critical because Nigeria is blessed with many natural resources that can boost the country’s foreign trade.
For context, apart from being one of the top oil-producing countries in Africa, Nigeria exports include fertilizers, cocoa, oilseeds, zinc, aluminum, lead, and many more. However, the West African nation has over the years failed to tap into its other wealth of natural resources available in the country and depended on just mineral fuels as this commodity makes 89.1 percent of the country’s total export.
An overview of the Agricultural sector
Agriculture is one sector that has the potential to reduce the country’s dependence on mineral fuels. It is the largest sector in the country, as it has contributed an average of 24 percent to the nation’s Gross Domestic Product (GDP) in the past seven years (2013 – 2019).
According to PwC, the agricultural sector is also the largest employer in Nigeria, employing over 36 percent of the country’s labour force. Nigeria’s major agricultural imports include wheat, sugar, fish and milk, while the main agricultural exports include sesame seeds, cashew nuts, cocoa beans, ginger, frozen shrimp and cotton.
Numbers to consider
Over 80 percent of Nigeria’s farmers are smallholder farmers (SHFs). This figure represents 90 percent of the country’s entire agricultural produce. In four years (2016–2019), Nigeria’s cumulative agricultural imports stood at N3.35 trillion, four times more than the agricultural export of N803 billion within the same period.
Nigeria’s agricultural exports declined by about 11 percent within 2018 and 2019 from N302.2 billion to N269.8 billion, respectively. On the other hand, the country’s agricultural imports rose by 12.7% from N851.6 billion to N959.5 billion between 2018 and 2019, the highest ever value in the country’s history.
Limitations of Agricultural industry in Nigeria
Shortages of resources
Farmers in Nigeria continue to suffer low yields due to the shortage of resources, such as seedlings, irrigation systems, fertilizers, etc.
The security situation in the country threatens the life and livelihood of citizens in the country badly enough. Conflict between herdsmen and farmers is also declining the food production output in the country.
Lack of modern machinery
Outdated agricultural practices such as the use of hoes and cutlasses in farming reduces efficiency of workers as these methods are costly and time-consuming. These outdated practices also reduce the quality of its agricultural products.
The inability for Nigeria to store food is one of the biggest menaces the agricultural sector is facing. A report by SBM Intel disclosed that 47 percent of farmers have no storage facilities to keep their produce after harvest. This proves that Nigeria is suffering from a situation of high production and little products.
Lack of access to finance
Although the federal government has passed several policies through the Central Bank of Nigeria (CBN) including the Anchor Borrower’s Programme to help provide small- scale farmers with adequate financing, the agricultural industry is still lacking adequate access to these funds.
The big picture
The agriculture sector in Nigeria is ripe for market-led growth and ultimately a competitive forex revenue source; from processing to transportation to trade. Crowned the seventh largest agriculture hub on the continent by the World Bank, the west African nation has the potential and already plays a key role in food security in both West and Central Africa.
- With well implemented policies, Nigeria’s agricultural sector can provide economic growth, increase opportunities, empower unemployed, promote innovation and lift people out of poverty.